Introduction
A cash-out refinance lets you replace your current mortgage with a new, larger loan and pocket the difference as cash. You can use that money to pay off debt, fix up your home, or cover big expenses. But before you move forward, you need to know whether the numbers make sense for you.
This cash-out refinance calculator helps you figure that out. Enter your current loan details, how much cash you want to take out, and your new loan terms. The tool will show you your new monthly payment, how much you could save or spend compared to your current mortgage, and how long it takes to break even on closing costs. It also builds a full amortization schedule and a step-by-step breakdown of every calculation so you can see exactly how the math works.
How to Use Our Cash Out Refinance Calculator
Enter details about your current mortgage, the cash you want to take out, and your new loan terms. The calculator will show your new monthly payment, how much you can save, and how long it takes to break even on closing costs.
Original Loan Amount: Type the amount you first borrowed when you got your mortgage. This is not what you owe today.
Original Loan Term: Pick the length of your current mortgage. Most home loans are 15 or 30 years.
Original Interest Rate: Enter the yearly interest rate on your current mortgage. You can find this on your loan statement.
Year Mortgage Began: Enter the year you started your current mortgage. The calculator uses this to figure out how much you still owe.
I Want to Take Cash Out: Turn this on if you want to pull money from your home equity. Turn it off if you only want to refinance.
Estimated Property Value: Enter what your home is worth today. This sets the most cash you can take out, which is based on 80% of your home's value.
Cash-Out Amount: Type or use the slider to pick how much cash you want. The calculator shows the maximum you are allowed.
New Loan Term: Pick the length of your new refinanced mortgage. A shorter term means higher payments but less interest paid.
New Interest Rate: Enter the yearly interest rate you expect on your new loan. Check with lenders for current rates.
Closing Costs: Enter closing costs as a percent of your new loan amount. Most lenders charge between 2% and 5%.
Annual Property Tax: Enter the total property tax you pay each year. This is added to your monthly payment estimate.
Annual Homeowners Insurance: Enter the total home insurance you pay each year. This is also added to your monthly payment estimate.
What Is a Cash-Out Refinance?
A cash-out refinance is when you replace your current home loan with a new, larger loan. The difference between what you owe now and the new loan amount is given to you as cash. You can use that cash for things like home repairs, paying off debt, or covering big expenses.
For example, say you owe $200,000 on your home and it is worth $400,000. You could take out a new loan for $230,000, pay off the old $200,000 balance, and keep $30,000 in cash. Most lenders will let you borrow up to 80% of your home's value through a cash-out refinance. You can verify this limit using an LTV calculator.
How a Cash-Out Refinance Works
Your old mortgage gets paid off and closed. A brand new mortgage takes its place. The new loan has its own interest rate, term length, and monthly payment. Because the new loan is bigger than what you owed before, your monthly payment may go up — even if you get a lower interest rate.
You will also need to pay closing costs. These fees usually range from 2% to 5% of the new loan amount. Closing costs cover things like the appraisal, title search, and lender fees. It is important to know how long it will take for your monthly savings to cover those costs. This is called the break-even point.
Cash-Out Refinance vs. Rate-and-Term Refinance
A rate-and-term refinance only changes your interest rate, your loan term, or both. You do not get cash back. A cash-out refinance does the same thing but also lets you pull money from your home equity. Because the loan amount is larger with a cash-out refinance, it often comes with a slightly higher interest rate.
When a Cash-Out Refinance Makes Sense
A cash-out refinance can be a smart move when interest rates are lower than what you currently pay. It can also help if you need a large amount of money and want a lower rate than a personal loan or credit card would offer. Common uses include funding home improvements, consolidating high-interest debt, or paying for education costs.
However, it may not be the best choice if it raises your monthly payment more than you can afford, if you plan to sell your home soon, or if the closing costs are too high to recover through savings. Always compare the total cost of your current loan against the total cost of the new loan before you decide. If you're not sure you need cash and simply want to explore lowering your rate, consider using our mortgage calculator or a home equity loan calculator to compare your options. You may also want to evaluate a HELOC as an alternative way to access your home equity without fully replacing your existing mortgage.