Hi all! I'm trying to understand how a cash out refinance typically works.
Let's' say I've refurbished a property, its ARV is $100,000, and a bank will offer a 70% loan-to-value cash out refinance.
Would this mean I would get $70,000 in cash less any transaction fees/closing costs? Or do lenders typically additionally require some sort of down payment (e.g. 20%) that most conventional loans require. So in effect I'd get $56,000 less transaction fees in cash and have $14,000 in equity?
@Scott Krause you would get $70,000 less any mortgage payoffs, closing costs, etc. The 30% equity you have left in the deal is technically the down payment.
In that scenario, you'd get the $70k less any closing cost fees. Your down payment is in essence the forced appreciation in the property, after rehabbed. Not a banker, and the 70% LTV that the bank would loan on in the above scenario, the 30% would be the "down payment" without the need for an additional 20%.