Updated about 9 years ago on . Most recent reply
Refinance math
In order to build wealth and make money work hard for me,I am thinking about how to use the equity I build.
After I purchase the property,if the refinance LTV ratio is 70%,the value of property should increase about 40% to refinance all the capital invested in the property.And if the property appreciation compound annual 10%,it need take more than 3 years to get 40% increase.
If the property does not appreciate a lot,the refinance does not worth it at all.So I need to use the capital I invested in the property more than once,I need to choose the property which has al lot of property appreciation.
Anything wrong about my math?Any inputs are welcome,thank you.
Most Popular Reply
In this case, you'd be able to reuse up to the 30% difference.
Example: Buy property for $100k, borrowing 70k and 30k down. 70% LTV. Fix it up and now it is worth $143k. Refinance at $100k, 70% LTV for the new value.
That's an arrangement I've run into with multiple lenders, but its best to talk with lenders you want to work with to find out what you can do.