Have you been paying for your home for a long time but want another house?
You can get a cash-out refinance with enough equity to cover the costs.
With a cash-out refinance, you receive the difference between the loan and your home’s equity in cash, making it a fast way to get the funds you need to buy another property.
There’s more to it than just that, so keep reading!
How Long Does It Take to Get Cash from a Refinance?
You’ll usually get the money as soon as the loan closes.
Although, it usually takes about a 30 to 45 days for the loan to close.
Different lenders can take different amounts of time, so if you’re in a hurry, talk to a loan officer to determine how long it will take.
Refinancing Your Home to Buy an Investment Property
Many wonder if they can use the cash-out refinance to buy an investment property.
The answer is yes!
Once that cash is in your hands, you can do anything you want with it.
That means you can use the money to put a down payment on an investment property.
Depending on how much you receive, you can pay for the investment property with cash.
You won’t have to worry about paying another mortgage if you can pay cash.
Advantage of buying an investment property?
You can use the investment property to earn an income from the rents received.
For example, if you end up having a mortgage on the investment property, you can use the rental income to cover the monthly mortgage payment.
It’s also an asset that appreciates over time. When the price of the house goes up, you can sell for a profit.
Overall, a cash-out refinance to buy an investment property is an excellent option.
Cash Out Refinance Steps
These are the exact steps that you can follow:
- Consult with a loan officer to determine what your options are. Since you will be taking out a mortgage, you’ll need to make sure you qualify based on your credit score, income, debt-to-income ratio, home equity, etc.
- Figure out how much you want from the refinance, and ensure you are comfortable with the new mortgage payment.
- Provide the loan officer everything they need to process the refinance. The loan has to go through the mortgage underwriting process.There is a checklist of items needed below.
- Wait for underwriting loan approval and the appraisal to be completed.
- Wait for underwriting approval to close. The mortgage underwriter must clear the appraisal and all your paperwork before you can close the loan.
- Receive your funds. Funds can be received via a wire or a check. Escrow / Title companies usually send the funds within a few days after closing.
While every lender is different, the loan process is usually the same.
Before finalizing the loan, ensure you are getting the cash back you need and are comfortable with the new loan terms.
When you first apply for the loan, you provide the lender with basic paperwork.
This usually includes:
- Paystubs for the last 30 days
- W-2s from the last two years
- Tax returns from the last two years (if self-employed or working on commission)
- Two months of bank statements
- Identification
Will I have to pay anything out of pocket?
An appraisal will need to be paid for upfront; that cost varies depending on the type of property and size.
Typically, the price ranges from $500-$800.
There are also other closing costs.
You can roll the costs into the loan if there is enough equity.
If not, you may have to pay out of pocket.
Final Thoughts
In short, you can easily use a cash-out refinance to buy your next home!
Many people also use this method to fund their investment properties as well.
Are you ready to apply? Start the process by completing the form below.