I purchased a home in Sept. and paid for it with cash. I want to do a cash out refinance for $60,000. What would be the best way to do this.?

Asked by Joyce, Michigan Sun Dec 26, 2010

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Dp2, , Virginia
Mon Dec 27, 2010
Actually, depending upon what you'd like to do, you have several options for doing what you want provided you have enough equity in that home (another way of restating the LTV issue that Ram raised). You might consider putting that equity to work by partnering with an investor.

For example, you could work with a flipper as an equity partner (by borrowing at no more than 40% to 50% of the LTV--perhaps start off with something smaller like $5K to $10K if you're highly risk adverse) to do some quick turns on some lower income properties. If done correctly, then you'd be able to service the equity loans on the properties in MI and AZ. Plus, you'd generate enough to pay off the equity loan on the AZ property with 3 months (less if you're only talking about $10K or less) easily.

Another option might be a diversity play where you'd still borrow no more than 50% of LTV, and you'd invest part of that into real-estate and part of it into stocks/bonds/options/etc.

Keep in mind that you don't necessarily have to refinance to put your equity to work. You could also use a portion of that equity as cross-collateral to purchase real-estate, stocks, and other assets. Although you technically could use that equity to buy other stuff, I wouldn't recommend it. After all, if you were to buy assets that would make you some money, then you could use the income generated from those assets to pay off the debt and to buy other stuff. (It's that "pay yourself first" principle that many financial planners preach.)

I could go on and on about all of the options that you have, but I don't want to belabor my point. Hopefully, I didn't bore you with all of those options. This is exciting stuff (at least it is to me).

Anyway, please feel free to drop me a line.
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Joyce, Home Buyer, Michigan
Mon Dec 27, 2010
Thanks for all the responses. Let me clarify a few things, the house I purchased is in Arizona. It is a 2nd home. I paid cash for it with funds from an equity loan on my Michigan property. I assumed I would move funds from my IRA to cover it, but my husband does not want to take the money out of the market now. Would the advice be the same under the above circumstances?
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Erica Ramus,…, Agent, Pottsville, PA
Sun Dec 26, 2010
Call a local lender or mortgage broker. He or she can interview you, ask a few questions, and tell you what the situation is. I do know that cash out refis are harder than ever to get.
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Adrian Hunti…, Agent, SAN FRANCISCO, CA
Sun Dec 26, 2010
Joyce,

When you buy a home for cash, you will have to wait six months until you can refinance. After six months from the recording date, you can go to any bank and do a cash out refinance. I would suggest you use the bank that is most convenient for you. Most banks interest rates are competitive in todays market.
0 votes
Adrian Hunti…, Agent, SAN FRANCISCO, CA
Sun Dec 26, 2010
Joyce,

When you buy a home for cash, you will have to wait six months until you can refinance. After six months from the recording date, you can go to any bank and do a cash out refinance. I would suggest you use the bank that is most convenient for you. Most banks interest rates are competitive in todays market.
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Eileen Gray, , Lafayette Hill, PA
Sun Dec 26, 2010
Is the home worth alot more than $60,000 is the first question? Cash out refinances are harder than they used to be because some lenders are requiring a year's worth of seasoning before they will refinance the property. Also, the other problem is with the softening of the appraisals it is hard to get money out of a recent purchase because the property values are not appreciating. Finally, how is your credit. It must be unblemished in order to get a refinance. I would recommend that you speak to a lender of your choice or one of my choice if you would like. I have several lenders I utilize as resources to get money for people taking into consideration the unique circumstances. If you would like me to give you advice once I find out more details about what you are trying to achieve, please feel free to contact me at 215-603-8484 or 610-260-4049.

Sincerely,
Eileen Gray
Century 21 Alliance
0 votes
Dallas Texas, Agent, Dallas, TN
Sun Dec 26, 2010
You need to contact a mortgage broker and submit a loan application APPLY for a loan with cash out options.

OR contact a local bank (small not national) if they would allow you borrow against your home.

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
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