eli5 What would happen if I pull the equity from my home with a cash out refi and then le the home go into foreclosure?

Question

Im aware that my credit is gonna take a big hit but I want to know what’ll happen to me down the road.

In: Other

Answer 1

As others have said, you won’t get 100% of the equity out. That creates too much risk for the bank.

But if you do this and then stop paying, the bank will foreclose and sell your house to recoup their losses. If they sell for more than what you owe (unlikely) they have to pay you the difference (after all of their fees and costs). If they sell for less than what you owe, they can come after you for the remainder.

So you won’t profit off of this in any way, and you’ll torch your credit rating. There is no advantage to doing this.