Understanding the cash out/loan in a BRRR

2 Replies

I planning to do my first BRRR strategy around next spring, but I wanted to make a few things clear first. I understand the basics up until after the refinance. Once we’re able to cash out after the new appraised amount was given, does our new 30 year (or however many year your loan is for) mortgage start from scratch? Ex. Buy for $50,000 Put down $10,000 Rehab $15,000 New value $90,000 Total invested $25,000 Cash out at 80% of value to have $72,000 in cash New loan ? I hope I’ve made sense of that. If I am missing something please correct me.

It starts from scratch. When you do a refinance for a house or a car the terms will be brand new. It will have a new interest rate. You can choose a longer or shorter term. You might be able to use equity and take cash out.  You will likely pay some kind of closing costs.

If you buy right and the new loan is a good loan it's worth the cost and starting the term over.

@Ahkeem Smith , to reiterate what was mentioned on the other thread where you asked the same question: Your Refi Lender will likely limit your LTV to 70-75% (of their appraisal).

Also, you may have difficulty finding a Lender to give out a mortgage of less than $50k to begin with. [Of course, getting a (replacement) loan at the Refi stage is a new Loan, new terms]. Cheers...