Would it be wise to do a cash out refinance before a recession?

Question

Hello,

I was hoping to gain some knowledge as to refinancing a home. Would it be better to do a cash out refinance now and hold the equity of my home in case of a market collapse?  I’m new to BP and was looking for some guidance.  It’s a multi family home and I’m wondering if keeping the cash flow coming in as it is, would be smarter choice and holding a smaller mortgage, or if I would be better to take the equity out now and be ready to buy another property in the event of a recession.

Thank you in advance for any guidance!

William Gantz · Answer

@Jerry Padilla

Great thanks for your advice it’s much appreciated!

Account Closed · Answer

Property doesn’t need to be primary to pull 75%.

Jerry Padilla · Answer

@William Gantz

If this property is a rental and not your primary as I had mentioned above the LTV is 70% for a cash out refinance.

William Gantz · Answer

Thank you all for your advice, I will look into the necessary steps to do so! I appreciate you taking the time to respond and hope I can be an asset to this forum the way you are.

Spencer Cornelia · Answer

@William Gantz You can either refinance now when rates are at historical lows or wait and risk not being able to refinance.  A common theme from everyone who talks about recessions: money dries up and getting loans becomes more difficult.  From what I've been told, I wouldn't expect you to have the ability to refinance if a major recession hits.

Jerry Padilla · Answer

@William Gantz

I wouldn't pull money out specifically for the fear of a recession.

I would pull money out now due to rates being low, and if you have a planned use for the money - like a down payment for more rental properties.

If your property, is a primary residence multi-family property you could pull out up to 75% LTV.

Tue Huynh-Nhut Vo · Answer

Based on my understanding, yes. Pull out the money while it's still good and interest rates are low.