Help me understand refinancing???.....

[Matt H]

Hello, I have a quick question. I have a 15 unit building. I'm thinking of refinancing in order to unlock some cash. I've never done it before so I'm trying to understand how much cash I'd get out after refinancing.

The building has a first mortgage of about $615k

It should now appraise at about $1.2m

So does that mean something like the lender will borrow me say 75% on that new appraised value of $1.2m, say giving me 900k in which I'd payout the first mortgage, leaving me with the remaining balance of $285k which I'd be able to pocket?

I think this is how it works when using refinancing to unlock cash from your property but I'm not 100% sure?

[Shanti S.]

Well, you're not going to get cash out on a car loan refinance - what you might get are lower payments via a longer term (you pay more) or a lower interest rate (could be some savings), or both (could break even or pay more in the end) .

It really depends on how many payments into the original loan you are - the interest is usually stacked up in front like a home mortgage - so paying it off very early is a big benefit; paying it off late in the loan term you'll realize very little savings.

I just tell everyone I can not to finance cars - I bought a new car once when I was 19 and I'll never do it again. When you can get a serviceable ride for under $2k, why have a car payment? If you want a status ride save up for it.