Is a Cash-Out Refinance Considered Income or Debt?

Cash-out proceeds are debt, not income. They're not taxable because you're borrowing money, not earning it. However, the loan increases your debt obligations.

• What to know: Understand the mechanics of cash-out refinancing so you can evaluate whether it fits your Houston investment strategy.
• Houston context: Houston's consistent appreciation and strong rental demand make cash-out refinancing a viable and popular strategy for local landlords.
• Action step: Calculate your potential cash proceeds using the formula: (Appraised Value x Max LTV) - Current Balance - Closing Costs = Cash Out.

Bottom Line

Cash-out refinancing is a foundational tool for Houston portfolio builders. Master the basics before committing to ensure it aligns with your investment goals.