I understand the price of the home has gone up since the purchase so there’s let’s say $30k in equity. How are they entitled to this $30k just magically? Does their mortgage balance increase too kind of like they took a loan out?
In: Economics
Put $100K down on a house priced at $242K four years ago. Refinanced this Spring, with a loan rate almost a full percent less but house was now appraised at $350K. The original $142K had been paid down to $132K so…
Remaining mortgage = $132K
Plus cash back of $66K
New mortgage of $198K
With home appraised at $350K and a new mortgage of $198K, we still have $152K in “home equity”. But of course $100K of that is because of our large down payment of $100K. On top of that, homes in our area sell within days of going on the market, some at fixed prices and some going to the highest bidder which usually end up at $10K to $20K over appraised value. I would not want to have to buy a house in this crazy market!
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