The Cash-out Refinance Strategy to Buy Property in Mexico.
If you live in the United States, it turns out that there’s a relatively simple way to get cash from your primary residence to finance a new home in Mexico.
In the United States, a cash-out refinance is a loan used to pay off and replace an existing mortgage. It can be used to convert home equity into cash, which can then be used to pay for more properties in Mexico.
So long as you’re able to keep up with the regular payments on your new loan, you’ll get money from your home that can go directly towards funding an investment property or second home in Mexico (or anywhere else for that matter).
Maybe you’re a real estate investor who’s looking for a second home or an investment property with great short-term rental prospects. Maybe it’s just your dream to own a Mexican beach condo.
Whatever may be luring you south of the border, a cash-out refinance is one option that lets you get cashback from the equity in your home and use it as down payment for a new home in Mexico.
What is a cash-out refinance exactly?
A cash-out refinance is a home loan taken out on a property that has an existing mortgage, and the proceeds from the new refinanced mortgage are used to pay off the original mortgage.
You can do this with your primary residence, second home, or investment property. The proceeds can be used to buy other real estate assets such as buying a home in Mexico..
It allows homeowner-borrowers to convert their home equity into cash (or “cash out”).
“Cash-out refinance” is an expression that sounds intimidating, but it’s really quite simple when you understand the basics.
In general, a cash-out refinance involves refinancing your mortgage by taking out a new loan amount that is larger than the current, existing balance of your mortgage.
The new mortgage replaces the existing one and creates a single, new loan on which payments have been scheduled to start on the day the money was received from the lending institution.
Why would someone want to use this option? Many homeowners find themselves in a position where they would like to reduce their monthly payments but don’t have enough equity in their home for traditional financing options like conventional or FHA financing (which requires 2% down payment).
It can also be useful if you need a large chunk of cash quickly so that you can take advantage of an attractive opportunity or if you are sick of paying high (or even variable) interest rates on your mortgage.
How much can you cash-out on your US property?
If you’ve got enough equity in your home in the U.S., you can use a cash-out refinance to borrow up to 80% of the value of your primary residence. This effectively lets you borrow money at a great rate, with low fees and an easy process, which is why many investors turn to this option when looking for funds to purchase property abroad.
It’s worth noting that there are other options if you don’t have 20% equity in the home where you’re doing a cash-out refinance. You can try hard money. Or private financing, but this comes with higher rates, so they’re not as ideal as getting capital through a cash-out refinance on your primary residence if possible.
In Summary: Cash-out refinance on your US home is a great way to buy your second home or investment property in Mexico.
A cash-out refinance is a way to access your existing home equity, which is the difference between the amount of money you still owe on your mortgage and the appraised value of your home.
In Mexico, it is very much a cash market so using cash-out refinancing is a great way to access cash to buy your home in Mexico.
If you have at least 20% equity in your US home, you can use a cash-out refinance to finance your purchase in Mexico.
If you don’t have enough equity for a cash-out refinance, there are other options for getting financing for an investment property or second home in Mexico.
Depending on where you live in the US, interest rates may be lower than what is available from Mexican banks or credit unions.
Before starting any application process, it’s important to consider all of your options and find the best fit for your particular situation.
Many clients have used cash-out financing to buy their homes here in Riviera Maya Mexico. Buying their property in Tulum, Playa del Carmen, Puerto Aventuras, and throughout Riviera Maya Mexico.
Find your next home in Riviera Maya Mexico today
Navigating the real estate market in Riviera Maya Mexico can be a challenge. Tulum and Playa del Carmen are the hottest markets to buy an Airbnb or a vacation home in Mexico.
But to make the right decision you will need help from an experienced and qualified Real Estate agent who can help you every step of the way.
From finding and viewing the properties to buying and closing on your property.
Caribe Luxury Homes has helped many Americans, foreigners, and Mexicans find their perfect investment property and vacation home in Riviera Maya Mexico.
And the service of our real estate agents is free for you as a buyer in Mexico.
Are you interested in receiving the best listings in Riviera Maya Mexico? Click the links below:
Get the 10 Best Tulum Vacation Homes (to Rent Out) on Sale Now
Mexico Vacation & Investment Property for Sale
10 Best Tulum Condos for Sale Under $150k
10 Best Tulum Condos for Sale Now Under $300k
Get the 10 Best Tulum Pre Construction on Sale Now
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Read more helpful articles below:
What Is A Good Cap Rate For Rental Properties In Mexico?
Click here to read more about buying property in Mexico as a non-Mexican.
Buying a Vacation home in Tulum Mexico to Rent out
5 Ways to Finance a Vacation Home in Mexico (as a non-Mexican)
8 Reasons Why Tulum Mexico Real Estate Market Is Booming (during the Pandemic)
What Property in Mexico Appreciates in value the most?
Guide to HOA Mexico Real Estate (Homeowners Association in Mexico)
9 Reasons Why Americans Love Moving to Mexico
