If I refinance my home and the agent will lend me more than I owe, would the remainder be classified as income or just part of the loan?
In a classic cash-out mortgage refinance, the home's value is estimated by an appraiser. This appraisal will be for a value greater than the original purchase price or the current mortgage amount. Any equity available can be borrowed against by the homeowner. If the homeowner refinances for amount larger than the balance of the mortgage, this is called a cash-out refinance.
Of course, 2008-2010 has been an especially brutal time for property values across the US, where we have seen home values fall 15% to 50% from their peak in 2007. Cash-out refinances are still available, but not for homeowners who refinanced or purchased homes near the peak of home prices.
The cash in a cash-out refinance is not income because it is a form of loan against the value of the homeowner's property. A cash-out refinance does not fit any definition of income I am aware of. However, if you have an unusual situation where you are gifting the funds to a family member, or using the money to fund a trust, then there may be some tax implications involved secondarily. Consult with a tax professional if there are significant facts relating to your question that you did not mention.
Go to the Bills.com mortgage refinance saving center for no-cost, pre-screened quotes from home mortgage refinance lenders.
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