Is Cash Out Refinance a Horrible Idea or Is it The Key To Real Estate Investing Success Today?

Video Closed Caption:

Good morning good afternoon good evening

folks michael zuber one rental at a time

back with his wednesday expert matt the

march guy how you doing buddy i’m doing

great mike how are you doing i’m doing

awesome man this one with a time thing

is taking off lots of people are taking

action doing deals and if you’ve been a

part of the community the last couple of

years you have a lot of equity

because we’ve probably seen in most

markets 30 appreciation so i don’t know

about you but i get lots of questions

about should i do a cash out refinance

is it a good idea or a bad idea

and frankly most of the time that’s the

end of the question i’m like i think i

need a little bit more information a

little bit more yeah that’s that’s like

my question i get is what are rates i

was like okay there’s 77 different

variables but uh yeah

where do we start and the interesting

thing mike about the cash out refinance

conversation is obviously as a mortgage

broker i’m getting these questions every

day but

you know when i look at


i don’t know five to seven youtube

videos i’ve made on the subject because

i’ve got 500 plus

i went into analytics last week and i’m

like holy cow like


ten times the volume on those videos

people are searching for these terms and

looking at these videos means there’s

more and more consumer demand whether

that is demand that comes from

advertising they’re seeing or whether

that’s demand coming from like

friends and family talking about it

the thing about cash out refinance i

feel like

what me and my team try to do

is you’re going to call me you’re going

to talk to me about your situation i’m

going to present you with options and

we’re going to talk through

whether or not it makes sense for you


there’s seven thousand different

variables yeah and i don’t know

if twenty two hundred dollars a month is

a comfortable payment for you you know

that i don’t know if um

you know you’re gonna plan on being in

this house for

six more months or 60 more years that’s

something that you know and i don’t and

so you know cash out refinance is an

amazing tool and i’ve seen

absolute home runs being hit or somebody


gosh this consumer debt has been

weighing on me i’ve got a 3.75 on my

first mortgage but i only owe 180 this

house is worth 550

and this 80 thousand dollars in debt

they’ve got like a 2400 a month outflow


you know citibank and home depot and all

these others

doing a cash out refinance paying all

that stuff off getting clear with your

budget and moving forward it can be an

absolute home run but on the other side

of the coin like it’s not right for

everybody yeah and just because you have

equity in your house

doesn’t mean you should pull it out yeah

that’s that’s where i want to start just

because you have the equity doesn’t mean

you should

a lot of people


high leverage which makes me

way uncomfortable and again because i

got 21 years doing this now and i saw

people get smoked last time

and a lot of it’s because they kept

treating their rentals or primary even

worse is atms

don’t do that i don’t ever give you

permission if you are going to do a cash

out refi and go splurge it on stuff

i’m not your huckleberry right that’s

that’s right that’s that’s not okay

um but if you have a plan for it if

you’re gonna either you know pay off 80

80 000 and 22 credit card debt have a

plan and that’s why i want here let me

be very clear if you are considering

doing a cash out refinance

you’re going to run into one of two

kinds of mortgage brokers mortgage

broker a is like matt the mortgage scott

he’s going to ask you questions

and when you give him the answers he may

tell you

doesn’t feel right

doesn’t feel right or you’re going to

get mortgage broker b who is going to

slam you with all kinds of fees treat

you like the legacy used car salesman

and oh by the way folks i believe the

next two years is going to be really

tough for mortgage brokers a lot of them

got bloated a lot of them have high

overhead costs and they’re going to try

to get every loan possible and frankly

one of the reasons i think your videos

are up is because mortgage brokers are

buying ads with those keywords so

youtubers ais hey they want to spend 50

bucks for a thousand views let’s push

this to the top yeah that’s that’s a

really good point yeah so that’s the

thing too is as as

the the share of mortgage refinance

decrease because rates are going up

there’s there’s less benefit right for a

lot of people um there’s going to be

folks out there that are pushing it hard

i mean i on on the properties i own get

endless yeah oh you have no idea how

many calls

and and i take them mike just because i

want to hear what’s being said i do not

take them

i’ve got i’ve got investment properties

sub 3


and i’ll tell the person no need for any

cash well what about this i mean they’re


to come up with with some sort of reason

and and they’re and they’re pure

salesmen they have no other intentions

you know here here’s one thing that i

think is going to be besides debt

consolidation where you pay off really

high interest rate debt what i’m also

i think going to see where it might make

sense for some people is

rather than sell your current home

and buy something that cost 600 000 have

a new really high tax bill probably a

higher interest rate because of the

future what some people might do is say

you know what

really if if our kitchen was nicer and

we can add a bathroom this could be our

forever house

you know you might pull out 80 000 in

equity do a couple projects and

you know you don’t get taxed on the

money you take out on a cash out

refinance your your property doesn’t get

reassessed um because you know it’s not

a sale there’s no transfer of ownership

and so in in that sense there’s i’ve

done a lot of those where people say you

know what like the market was so crazy i

you know didn’t want to go through

trying to sell and buy

i’m gonna take some equity and make my

current house what i want it to be you

know that is is another way where this

equity can be utilized you know like you

said it’s not a trip to vegas and it’s

not you know going out and buying sixty

thousand dollars for the dogecoin

that lottery ticket works out that’s

yeah do not advise not invite that bad

bad bad yeah the other thing i want to

say uh about doing a cash out refund as

an investor is you can do them badly

read my book one rental at a time my

first cash out refi was stupid i took as

much as i mean i would

probably like a lot of you right the

bank tells you how much do you want i go

how much can you give and i said i want

that amount well lo and behold i was

writing i i created an alligator and i

was losing money every month for until i

sold it it was a horrible feeling i felt

so stupid don’t do that

uh and then lastly you just brought up

something is why i think real estate’s

gonna slow down going forward as rates

go up people are going to

make their nest better they’re just not

going to move because they don’t want

the price increase and the rate increase

uh so a lot of that stuff is coming so

in the end a cash out refi can be great

but it also can be horrible right it’s

what your plan is so do yourself a favor

reach out to an agent or a broker like

matt the mortgage guy who’s gonna ask if

if you reach out to a mortgage broker to

do a cash out refi and they force

paperwork down your hand

day one not not that not a good guy if

they’re not asking questions they are


out for themselves

versus you

so matt the mortgage guy and his team

are going to ask you questions because

it may not be the right answer right and

here’s here’s some actionable advice

whether it’s us or whether it’s somebody

else this is what i think that the

consumer should do so that they can kind

of wrap their head around does it make

sense if you reach out to our team and

you say

you know here’s what i owe here’s what

it’s worth here’s what i’m looking at

doing i don’t know whether i need forty

thousand sixty thousand or eighty


let us prepare a quote

show you what that looks like because

you wanna not only see

you know

okay i can get out 80 000 but what are

the payments

and what do i know about my monthly

budget whether that’s comfortable

payment what that’s going to look like

if times are good if times slow down

whatever the case may be you want to

analyze that stuff before you just say

oh i’ve got 200 000 in equity and i know

i can pull 80 000 of it out i’ll figure

out something to do with that money you

know just cash me out to the max i mean

because truth be told there’s some

people mike that just literally go 80

the maximum i go on my primary okay

whatever it appraises for 600 will go to

80 ltv

and you know no care in the world that

that could get you hurt you don’t want

to do that don’t do that yeah


is is a quick uh little you know

questionnaire form that gets you in

touch with us and we’ll we’ll be able to

guide you in the right direction yeah

again folks great mortgagebroker.com go

there if you’re in our one room solid

time community watching this

get somebody that’s going to ask you

questions it’s

and it’s only going to get worse

mortgage brokers

are about to get super uber aggressive

so be careful watch yourself go to

someone like matt the mortgage guy who’s

going to be on your side and help you

out thanks buddy yeah thanks mike


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