Noobie Question on Refinancing

7 Replies

This is going to be a real n00b question but I am new and I always get confused about refinancing. 

The down and dirty is I bought a house for 135k with a VA loan so 0% down payment. 2 years later the house is appraised at 155k. Could I essentially just refi and pull 20k out and it wouldn't affect my loan? Or use that 20k to help pay off my current loan?

Originally posted by @Timothy Casallas :

This is going to be a real n00b question but I am new and I always get confused about refinancing. 

The down and dirty is I bought a house for 135k with a VA loan so 0% down payment. 2 years later the house is appraised at 155k. Could I essentially just refi and pull 20k out and it wouldn't affect my loan? Or use that 20k to help pay off my current loan?

The $20k equity can only be pulled out by doing a cash out refi which would be a new loan. You can also do a HELOC and pull cash out, up to 90% of the value

Brie Schmidt, Real Estate Agent in Illinois (#471.018287) and Wisconsin (#57846-90)

Thank you @Brie Schmidt for the very quick response. I am about to do some HELOC research here in a minute but while I have you here, would a HELOC be a new loan as well or require me paying the bank back anything even though it is my money? Basically are there any cons to a HELOC?

Originally posted by @Timothy Casallas :

Thank you @Brie Schmidt for the very quick response. I am about to do some HELOC research here in a minute but while I have you here, would a HELOC be a new loan as well or require me paying the bank back anything even though it is my money? Basically are there any cons to a HELOC?

 It is your money when you sell.

A HELOC is a second lien on top of your current loan, so it would be a second loan payment.

Brie Schmidt, Real Estate Agent in Illinois (#471.018287) and Wisconsin (#57846-90)

@Brie Schmidt Thank you again for the info. I schooled myself up as well on HELOCS. did some google searching. I guess what I really want to know is that other than selling the property, how would I be able to pull out the 20k made off of appreciation without having a new loan on it?

Originally posted by @Timothy Casallas :

@Brie Schmidt Thank you again for the info. I schooled myself up as well on HELOCS. did some google searching. I guess what I really want to know is that other than selling the property, how would I be able to pull out the 20k made off of appreciation without having a new loan on it?

You can't. The only 100% LTV loan is a VA loan

Brie Schmidt, Real Estate Agent in Illinois (#471.018287) and Wisconsin (#57846-90)

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.