Pay cash and then cash out refi? (loan, foreclosure, credit)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Many investors/banks will use the original purchase price or the appraised value (whichever is less) as a basis for the refinance. So, if you buy a home valued at 200K for 100K, 100K will be considered the value for the refinance. In other words, don't expect to tap into your equity right away.
I actually did that in the past, not sure it is so easy any more...
...a dozen or so years ago I bought run down house in a nice area that way. The turn around, or period I had my cash tied up, was a little over 90 days AFTER I was able get the title clear. Depending on the circumstances of the auction / trustee sale the title might be clouded for quite some time.
For these reasons I woukd be very cautious. Further, the tolerance of lenders to do cash out refi, even at only 80% or less of purchase price, will STILL be driven by an appraisal, which, in areas with many foreclosures, (like most of Nevada)could still come in too low for you to recoup even 80% or your cash.
If your dough is currently sitting in some under 2% savings account the purchase MIGHT be ok, but if it earning good dividends elsewhere and you are buying the house as an investment this might not work out all that well...
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.