Just Approved: Cash-out refinance helps client launch new business venture
Mortgage advisor: Dominique Stevens, Mayfair Mortgage Advisors
Property type: Town home.
Location: Foster City.
Loan amount: $995,000.
Interest rate: 6.99%.
Loan type: 30-year fixed cash-out refinance.
Backstory: Our client had bought his beautiful townhouse, situated right on the water in Foster City in the 1990s. As a single man at the time, he paid a whopping $420,000 for the property thinking he was crazy to spend so much.
Fast forward 30 years. Now married, with kids all grown and out of the house, the unimaginable has happened: that charming townhouse is now worth $1.6 million.
Such is the case with many of our Bay Area homeowners. Welcome to the real estate lottery — or one of the most enormous wealth accumulators in modern times.
Our client and his two colleagues have developed a new supply chain management software system for the shipping industry. They are planning to launch sales this year.
The homeowner approached me about the feasibility of doing a cash out refinance of his home, which would enable him to have ample resources available if he should not be able to pay himself in the foreseeable future.
When we ran the numbers, we found he could easily access $500,000 in funds to have as backup for this new venture. What he doesn’t spend, he could put back down on the mortgage which is referred to as re-casting the loan.
The wonderful thing about accessing funds this way is that he is accessing equity in the home, which is not considered income, so these are non-taxable funds. This strategy proved to be the solution which best suited his needs.
We were able to have his property appraised, wrap up his loan in...