Real Estate Investing Glossary
Cash-out refinance
A cash-out refinance replaces an existing mortgage with a larger one and pays the difference to the owner in cash.
A cash-out refinance replaces an existing mortgage with a larger one and pays the difference to the owner in cash. It converts part of the property's equity into available funds.
Why it matters to a Las Vegas investor
Some investors use the equity in one rental to help fund another purchase. The trade-off is a larger loan on the property, so it is worth understanding what that does to the monthly payment and to your cash flow.
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Questions about Cash-out refinance
What is the difference between a refinance and a cash-out refinance?
A standard refinance replaces the loan without taking out extra money. A cash-out refinance increases the loan and pays out the difference.
What does the owner give up in a cash-out refinance?
Equity in the property is reduced, because the loan balance is higher afterward.