Things to keep in mind when doing a cash out refinance?
I know this sounds a little straightforward , you take out built equity from payments and your loan extends , but is there anything else that is not commonly talked about that you may have wish you knew before taking out a refinance?
[{"id": "i5k5hqz", "text": "Prepayment penalty and amount of closing costs. Is it under your personal name or do you want to refi it into an LLC? Is the interest rate higher than your current rate (probably)? Is the cash being taken out worth the higher interest rate? When do you plan to exit?\n\nJust some things to keep in mind, good luck.", "replies": [{"id": "i5k5mj8", "text": "Thanks", "replies": [], "depth": 2}], "depth": 1}, {"id": "i5k64ez", "text": "Get offers from different types of banks on the same day or a day apart if possible. I\u2019ve been telling everyone when the rates dropped to lock in asap If the numbers make sense. With the current market the longer you wait the worse it\u2019s going to get.  The last guy who didn\u2019t listen to me I quoted 3.125% at beginning. He thought he could shop around before sending me documents to lock in the rate. He ended up shopping for over a month, I ended up beating the final banks offer a month later again.By the time we locked it in it was 4.375%.", "replies": [], "depth": 1}, {"id": "i5k6boc", "text": "Your debt service increases which can affect your ability to qualify for other financing.", "replies": [{"id": "i5kttmf", "text": "So would the lender care a lot about the amount you have owed if you have been paying them off on time and all?", "replies": [{"id": "i5l5q4n", "text": "Yesp", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i5kgurr", "text": "Outside of 1-4 SFR most lenders care more about your DSC than your LTV.", "replies": [], "depth": 1}, {"id": "i5min1b", "text": "When comparing quotes from different lenders, consider the *Effective Borrowing Cost* as opposed to just an interest rate. Lender points, cost of third party reports, legal fees, survey, term, etc. will all affect your EBC. Basically the lowest EBC is the best deal for you financially.\n\nBesides that, you should also ask for loan quotes at different LTV points. Unless you need to maximize your cash out, reducing the proceeds for a better rate may be a more valuable capitalization depending on your expected hold period.\n\nGood luck!", "replies": [], "depth": 1}, {"id": "i5mmgnr", "text": "Interest rates are probably the main thing you will look at but, I would also review the other terms, mainly; prepayment penalties, closing costs, appraisals, environmental (if required). Knowing all of your costs prior to refinancing will give you an accurate overview that can be compared with other lenders.", "replies": [], "depth": 1}, {"id": "i5n2n0a", "text": "If your equity quickly went up...it can also quickly drop. Keep your loan to value low enough so that you aren't upside down should the market tank again.", "replies": [], "depth": 1}]