I purchased a rental 3 years ago for 56k (20% down) and I currently owe 32k on it. The projected value is in the 80k-90k range. I plan to do a full rehab and cash out refi to purchase another property. Is it possible to still cash out refi owing that little on mortgage? I know that ARV would be around 100k from the comps I've looked at but I've never heard if loan balance would be a factor in a refi. Any help would be greatly appreciated. Thanks!
@Carey Grant you should be fine. It's called cash out refi for a reason. They refinance your old loan into a new one (it get's paid off at closing) and you get the balance in cash. If you owe 32k and you spend 30k that will put you at 62k cost and if the appraisal came it at 100k, the bank will lend you 75k - and give you a check for 13k. Make sure your cash flow is still good with the new loan. My biggest concern would be that you underestimate the rehab cost!
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