Definition
Equity stripping is extracting equity from property through refinancing or home equity loans, reducing net equity. Can be legitimate cash-out refinancing or fraudulent schemes.
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Can be legitimate cash-out refinancing or fraudulent scheme where someone takes equity without owner knowledge.
Pro Tip
Be cautious with equity stripping. Ensure it serves your financial goals.
Example
Homeowner refinances to take $100,000 in cash, reducing equity from $200,000 to $100,000.