| Month | Payment | Principal | Interest | Ending balance |
|---|
What Is a Cash-Out Refinance?
A cash-out refinance replaces your existing mortgage with a new loan that’s larger than your current balance. The difference between the two amounts is paid to you as cash at closing.
Homeowners typically use cash-out refinances to:
- Consolidate high-interest debt
- Make home improvements or renovations
- Fund education or major expenses
- Invest in additional property
- Access equity at potentially lower interest rates
You receive cash, but your loan balance increases, and your monthly payment may change depending on your new rate and term.
How This Calculator Works
This tool evaluates your refinance details and instantly shows:
1. Your current home equity
Based on:
- Estimated home value
- Current loan balance
It calculates your:
- Current LTV (loan-to-value ratio)
- New LTV after refinancing
- Total equity available
- Maximum cash you can take out while staying within lending guidelines
2. Your new monthly mortgage payment
The calculator compares:
- Current principal & interest
- New principal & interest
And shows:
- Monthly payment increase or decrease
- Time left on your current loan
- Time on the new loan
3. Total interest over the life of both loans
See whether refinancing saves you interest or increases long-term cost.
You’ll get:
- Total interest remaining on your current loan
- Total interest on the new refinance
- Interest difference → savings or added cost
4. Closing costs and cash available
You’ll see:
- Gross cash-out requested
- Total closing costs
- Whether costs are financed or paid out-of-pocket
- Net cash you receive at closing
This helps you understand exactly how much money you’ll actually receive.
5. Break-even calculation
If the refinance lowers your monthly payment, the calculator shows:
Break-even point = Closing costs ÷ Monthly savings
If the new payment is higher, the calculator tells you there is no break-even, which is normal for most cash-out refinances.
Cash-Out Refinance vs. HELOC vs. Home Equity Loan
| Feature | Cash-Out Refi | HELOC | Home Equity Loan |
|---|---|---|---|
| Funds received | Lump sum | Flexible credit line | Lump sum |
| Rate type | Fixed | Variable (usually) | Fixed |
| Replaces primary mortgage? | Yes | No | No |
| Closing costs | Moderate | Low–moderate | Moderate |
| Ideal for | Large expenses, debt payoff | Ongoing projects | Fixed one-time need |
A cash-out refinance is best when you want a single fixed mortgage payment and need one large payout.
Frequently Asked Questions (FAQs)
How much cash can I take out in a refinance?
Most lenders allow borrowing up to 80% LTV for a cash-out refinance on primary residences. This calculator shows your maximum based on home value and loan balance.
Does a cash-out refi increase my monthly payment?
Often yes, because:
Your loan balance increases
Your loan term resets
Your interest rate may change
The calculator compares your old and new payment instantly.
Are cash-out refinance proceeds taxed?
No – refinance cash is not taxable income, because it’s loan proceeds.
Can I use cash-out refinance funds for anything?
Yes. Common uses include home improvements, debt consolidation, tuition, and investing.
Do closing costs reduce the cash I receive?
If financed into the loan, closing costs reduce equity and increase your balance. If paid upfront, they reduce your out-of-pocket cash instead.