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

7 Replies

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

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.

@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.

Originally posted by @Jerry Padilla :

@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.

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

@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.