Cash Out Refinance Tricks and Tips?

Question

I am nearly completed with my first fix and flip and will be doing a cash out refi in about 2-3 months. I was told recently that I could negotiate refinance fees basically down to nothing if I tried hard enough. This got me thinking if there are any other good hacks/tips with refinancing. Interested to see if anyone has any good suggestions!

Thanks!

Aaron K. · Answer

Not sure how it would affect their formula, but usually you should be able to sell your flip fast enough that refinancing would not be worth the time.  If you are rehabbing and then renting the property then I would say absolutely go for it and refinance.

Ryan Biankowski · Answer

To run the numbers;

Purchased: $165,000

Current Mortgage: $153,000

ARV (as of today): $240,000

CC Debt: $10,000

In summary, I know I have CC debt that I am actively lowering but the home is complete and ready for a big cash out.  Does this change things?

Aaron K. · Answer

If you have credit card debt I would recommend paying that off first, most credit cards charge 17% plus in interest and paying them off basically gives you a guaranteed 17% return which is very difficult to find in any other investment, at least that I have seen.  If your flips aren't returning significantly more than that I would pay off the CC debt.

Richard C. · Answer

I expect the reason is that the credit union carries the loans on their portfolio, and doesn't sell them in the secondary market.  What exact features of the secondary market make it harder for the banks, I do not know.

One of the great things about a decent credit union is that it is easy to develop a banking relationship.  I have a loan officer I use for everything.  There are not ten different departments like at the banks.  So I just tell him what I want to do, and he tells me if he can do it.

Ryan Biankowski · Answer

This is a good idea.  Why WOULDN'T banks be open to cash out refinances?  How do I word this when visiting with a lender?  Do they typically just assume you are going to be refinancing the existing balance?

Richard C. · Answer

My only trick isn't much of a trick.

I have found that my local credit union is much more open to cash-outs than the local banks.  Consider using a credit union.

Ryan Biankowski · Answer

Thanks Aaron.  I have about 10,000 in debt on credit cards due to repairs.  I make decent money on my W-2 job but was wondering if you think this will negatively affect a refinance of any sort?  In other words, will be the banks generally look at this negatively?  I do have excellent credit.

Aaron K. · Answer

Find a lender you trust and who trusts you.  That will make your life so much easier if you have a good long term working relationship with a lender, as they may waive fees that a stranger would not.