How I Made $84,000 Refinancing My Home in Austin

One of our founders, Kristina Modares, bought a home in East Austin in 2017. In the past 3 years, she has made numerous improvements and added a lot of value to her home. Because of this she has decided to cash out refinance her home in 2020.

So, what exactly is refinancing and cash out refinancing?

This means that Kristina is planning to apply for a new mortgage on her East Austin home, and plans to improve her loan terms. This mortgage will then reset, and will start another 30-year clock. This is often great to do when interest rates decrease, like they currently have. But even more specifically, Kristina is going to be doing a cash-out refinance. So, what does that mean?

So, since Kristina put money into her home located in an up and coming neighborhood, her home is now worth more than is was when she purchased it. This means she can take out cash from this refinance, and use it on other things. You can use the money you take out from a cash out refi on anything you want but the smarter use for that money (remember you still have an interest rate) is to invest it. Kristina plans to invest in two more properties with the cash she pulls out of her home.

Now that we understand what exactly a cash-out refinance is, let’s learn about the process! In order to cash-out refinance her home, Kristina had to talk to a lender. We work with many reliable and kind lenders and can recommend a few if you are interested in refinancing or buying a home!

So now let’s check out Kristina’s home and her original costs:

If you look at the original price of the home, and the cost of the renovations (SO WORTH IT) the house value appears to be around $334,000 ($280k + $54k). Kristina had to get her house appraised to see what the new value is, based on these numbers as well as the appreciation of the neighborhood, and other factors. Her house appraised for $415,000!

Numbers can be a little confusing - so let’s break it down! The house was appraised at $415k. Kristina can pull out a maximum of 80%, which she is choosing to do. 80% of $415k is $332k - the refi on her new loan. Out of that $332k, Kristina is paying off $237k, leaving us with $95k. After you take out loan fees and other costs, you are left with $84k to pull out.

So wow, $84,000 dollars at her disposal! And through all that, her monthly mortgage payments only increased by $230 dollars - not bad! Now, what is Kristina going to do with that money?

Kristina plans to use that $84,000 to buy 2 additional properties, 1 in Austin and 1 in Florida, and rent out her current home! She will likely be able to cover her monthly mortgage payments through charging rent - and possibly make additional money (otherwise known as house hacking).

She can then live in her new Austin or Florida homes while making renovations and adding more value to THOSE homes as well. It’s an interesting web, where you live in a home and slowly work on it as the property increases in value - especially when buying a fixer upper home and forcing appreciation through renovating.

Interested in a cash out refinance? Fill out the following form to see what the cost would be for you!

I hope you were able to learn something new about real estate today and are as excited and amazed as I am! What a brilliant investment strategy! The idea that you can pull out a large amount of cash from your own home to use for whatever you want is pretty exciting! I’m sure this has also brought up some personal questions you have about buying a house, refinancing and investing. We are always happy to educate more people and welcome your questions! Just know that you will truly get the best education through getting started and jumping into the arena. We are here to walk you through the process of buying and also educating you along the way.