Bank wants to know why I want to cash out refinance

8 Replies

Hi all! I am trying to do a cash-out refinance on my house that is completely paid off. The loan is in process, but in the mean time, my bank sent me an email asking me what I am planning to do with the money. I don't see why this is any of their business. The truth is that all of my assets are tied up in this house, and I'd like them to be liquid.

 I will be doing several things with that money including possibly investing into more real estate. Would they be scared that by investing into real estate, that I wouldn't be able to make my payments to them? Thanks for your help guys!

Nope, has nothing to do with them thinking you cant pay. FYI it's Big Brother mentality and the US Govt is really putting the screws on individual freedoms when it comes to what you want to do with your money. It's getting more and more difficult to moving your money around. 

You should Google the word FATCA.....I've studied this new law and it's outrageous what this Govt is doing with the rest of the world. Bullying tactics pure and simple.

They are doing their best to restrict the movements of everyone's money so it doesn't surprise me that your bank is asking this.

IMHO knowing what I'm like, I'd tell them in no uncertain terms, it's none of their business.

It's an outrage really, but someone who maybe a little more adroit would offer an answer of, well it's for personal reasons. I've never been asked but you have to wonder....what is next??

I would also question that perhaps you should consider changing banks. After all, they are there to look after your interests. Snooping is not cool.

Is this for a loan on your home? If so, the correct answer is always "remodeling".

Just tell them the truth: you're taking a trip to Las Vegas and you expect to come back broke! Cheers...

The bank has every right to ask.  After all, it's YOU who wants to borrow THEIR money.  As such, they have the right to put stipulations on who they loan money to and for what purpose.  And some lenders do have policies prohibiting the purpose of the loan being to buy investment properties. 

If you truly just want to be "more liquid", then you might try listing your purpose as "to have cash reserves".  It's usually best to do your research on lenders before you apply and ask them up front if there's anything they do NOT allow the money to be used for, and then apply with the lender that best suits your individual needs.

Wow, I really love this community. So many quick & thoughtful responses. You guys have helped tremendously, thanks!

Originally posted by @Sewi Wawa :

Hi all! I am trying to do a cash-out refinance on my house that is completely paid off. The loan is in process, but in the mean time, my bank sent me an email asking me what I am planning to do with the money. I don't see why this is any of their business. The truth is that all of my assets are tied up in this house, and I'd like them to be liquid.

 I will be doing several things with that money including possibly investing into more real estate. Would they be scared that by investing into real estate, that I wouldn't be able to make my payments to them? Thanks for your help guys!

 The reality is this letter is a formality. If you put you're using the proceeds to bolster your savings and reserves you should be fine. 

Albert Bui, Lender in CA (#345453), WA (#345453), TX (#345453), and TN (#345453)
949-514-5106

I just did a google  search for "Why is my bank asking me what I am going to do with a cash out refi" like it is any of their business and I came across this.

I did tell them it was to buy more properties and my loan officer said no don't say that!  I am like HUH?  This is my money I  bought the decrepit house, fixed it up and now I want to take my money and buy more houses with the money is wrong?

All they should be concerned with is my ability to pay the loan back am I missing something?

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