cash out refinancing help?

Question

my parents bought a house back in 1999 for around $244k and have around 60-70k left on the mortgage. The market in our area is exploding and the value around our area is $600-700k.

I was wondering what kind of options does my parents have with the amount of equity and appreciation they've built up for 18 yrs. It's their primary residence and their mortgage is around $970 a month. This neighbourhood you can rent the the place for at least $1900 for a 3bd 2.5bath. I just feel like I can help them be in a better situation but I'm a new to real estate and not sure what would be the best option for them to take advantage of the hot market here.

Quang Nguyen · Answer

That's the market here in Toronto, Canada. I assume its like Denver and Seattle prices. $1900 is minimum but I've seen it max probably $2400

Brian Garrett · Answer

$1,900/month on a $600k property is a horrible rent to price ratio. Are you sure that's accurate?

Even here in South Florida which is a very expensive and hot market $1,900 month for a rental would only get you a $200-250k place at best.  Your deal sounds better for the renters!

Quang Nguyen · Answer

thanks. I'll reach out to some lenders and see how I can do the cash out refi.

I'm not sure if I understand it thought. when you do a cash out refi, are you extending the term? and taking out the equity from it? It would be great if I can see a spread sheet how the numbers work with a cash out refi. I'm not sure I understand how it works.

Steven D. · Answer

If you can only get $1900/month for a house worth north of $600k that is not a good option. They are best selling the house or doing a cash out refi and investing the money elsewhere.

Andrew Postell · Answer

@Quang Nguyen When you state "I feel like I can help them"....what did you have in mind?  If you share with us what your goals are that might help us give better options.  Thanks!

Alex Capozzolo · Answer

@Quang Nguyen It sounds like a Cash Out Refinance could be a great option for your parents, especially with the equity they've built up through appreciation! I would reach out to some of your local lenders who specialize in these, and see all your options !