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cash out refi on less that 100k properties or blanket mortgage
is there a way to cash out refinance 2 properties I own? the first property is worth around $69k is paid off and bought it 2 years ago. the second property is worth around $68k bought that property on November of last year with a loan. those properties are occupied by tenants. do you guys know if I can cash out refi each property with that amount or can use both properties at the same time with a blanket mortgage?
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1 Reply
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You have a few options for cashing out on your properties, whether one at a time or through a blanket mortgage. Below is how each option works.
Individual Cash-Out Refinances
First Property (Paid Off): With this property being free and clear, you shouldn’t have any problem qualifying for a cash-out refinance. Generally, lenders allow cash outs of 70-80% of the appraised value. On a $69K property, pull out anywhere from $48,300 – $55,200.
Second Property (With Loan): This property can also be cashed out, but first, the existing mortgage must be paid off with the new Loan. Assuming equity, some of that could be pulled out subject to the same 70-80% LTV limit.
Blanket Mortgage
What Is A Blanket Mortgage? A blanket mortgage is when multiple properties are under one Loan, allowing leverage to combine the debt of both houses.
Advantages: A blanket mortgage might allow you to access more cash than refinancing each property separately. It also simplifies things by requiring only one Loan instead of multiple mortgages.
Loan-to-Value (LTV) Ratio: Typically, a lender may offer 70-75% LTV on the combined value of both properties. Based on your property values ($137K combined), you could cash out between $95,900 and $102,750.
Considerations: These are usually used by investors with many properties, so they may have stricter terms, like cross-collateralization, where if one defaults, it affects all.
Both Options Considerations
Lender Requirements: Specifics such as LTVs, interest rates, and terms will vary among lenders, so shop around and consider someone specializing in investment property financing.
Equity & Cash Flow: Make sure that after factoring in new loan payments, the cash-out refinance or blanket mortgage still allows for positive rental income.
You can either cash out and refinance each property individually or use both properties in a blanket mortgage. The best option depends on your financial goals. How much equity do you want to tap into? Are you okay with dealing with multiple loans? Or would you rather have one? Speaking to an investment-savvy mortgage broker should help guide this decision.