Loan Cash-Out Refinance Calculator
Cash-out refinancing trades home equity for cash and a brand-new loan clock. Enter your current loan and the new one you are considering — see the new payment, how much extra interest the reset really costs, and whether there is a break-even at all.
The trap this calculator exposes: refinancing restarts the amortization clock, so even a lower rate can mean more total interest — and cash out means paying interest on the cash for up to 30 years. Compare the total-interest lines, not just the monthly payment. The Closing Cost Estimator itemizes what that closing % typically contains.
How it works
New loan = current balance + cash out. Both payments use the standard amortization formula on their own balance, rate and remaining term. Total interest is payment × months − balance for each loan. Break-even months = closing costs ÷ monthly payment saving — and when the new payment is higher, there is no break-even: the refinance is a purchase of cash and time, priced by the interest-delta line. The equity check shows your loan-to-value after the cash out; most lenders cap cash-out refinances near 80% LTV on a primary home.
Formula & worked example
Formula: Payment = balance × r ÷ (1 − (1 + r)−n), with r = annual rate ÷ 12 and n = months. Total interest = payment × n − balance. Break-even months = closing costs ÷ (old payment − new payment), defined only when the payment falls.
Worked example: Default: $280,000 at 5.9% with 22 years left pays $1,896.10/month and $220,570 of remaining interest. The $320,000 cash-out loan at 6.25% over 30 years pays $1,970.30 and $389,306 of interest — no break-even, because the payment rises.
When to use this
- A lender mails you a cash-out offer and you want the unbiased total cost
- You are funding a major renovation and comparing ways to borrow against the house
- You are consolidating high-rate debt and need to see the true trade over the full term
- Rates have dropped since you bought and the cash is a bonus on a refi you wanted anyway
How to use it, step by step
- Enter your current balance, rate and years remaining from your statement.
- Enter the cash amount you want and the new loan's rate and term.
- Set closing costs (2% is a fair mid estimate; itemize it if you have a quote).
- Read the payment change AND the total-interest change — both, always.
- Check the break-even months against how long you will realistically stay.
- Compare the second-lien alternative (HELOC / home equity loan) before signing.
What the inputs mean
| Input | What it is | Typical values |
|---|---|---|
| Current balance / rate / years left | Your existing loan as it stands today — from your latest statement. | Pull exact figures; small rate errors move the verdict |
| Cash out | The amount you want in hand, added to the new balance. | Renovation and debt consolidation are the common uses |
| New rate / term | The offered replacement loan. Term resets are the hidden cost. | 30-year resets are standard; 20- and 15-year options exist |
| Closing costs % | Lender, title, appraisal and recording, as a share of the new loan. | Typically 2–5%; itemized by the Closing Cost Estimator |
| Home value | Sets the post-refi loan-to-value against lender caps. | Cash-out usually caps near 80% LTV on a primary home |
Another worked example
A case where the payment does fall: $280,000 at 7.4% with 25 years left (payment $2,051.00, remaining interest $335,299), refinanced to $300,000 — $20,000 cash out — at 6.0% over 30 years. The new payment is $1,798.65, saving $252.35 a month, so the $6,000 closing cost breaks even in about 23.8 months. Yet total interest rises to $347,515 — $12,216 more than staying put — because the clock restarts and the balance grew. A lower payment is not the same as a cheaper loan.
Frequently asked questions
Why does my payment go UP in the default example?
Three forces at once: the new rate (6.25%) is higher than the current one (5.9%), the balance grows by the $40,000 cash out, and only the longer 30-year term pushes back. Payment rises from $1,896 to $1,970 — and total interest jumps from $220,570 to $389,306. That is the honest answer for a lot of real cash-out quotes.
What is the true cost of $40,000 cash out?
The cash itself is not free money — it is borrowed. At 6.25% over 30 years, $40,000 of the new loan costs about $48,600 in interest on its own. A home equity loan or HELOC for the same $40,000 over a shorter term usually costs far less; compare with the HELOC vs Home Equity Loan Calculator.
When does a cash-out refinance make sense?
When the new rate is meaningfully below your current rate, the cash funds something with a return (a renovation that adds value, or retiring much higher-rate debt), and you will stay in the home well past the break-even. Run the debt case carefully — moving credit card debt to a 30-year loan lowers the payment but can raise total cost.
How much cash can I take out?
Most lenders cap the new loan at about 80% of the home's appraised value for a cash-out refinance on a primary residence. On a $450,000 home that ceiling is $360,000 total — with a $280,000 balance, up to about $80,000 of cash before closing costs.
What are typical closing costs on a refinance?
Roughly 2–5% of the new loan amount all-in, with lender fees, appraisal, title and recording making up most of it. The Closing Cost Estimator breaks the typical line items down so you can judge whether a quote's 2% is honest.
🏠 Borrowing against the house another way?
A HELOC or home equity loan takes the same cash without resetting your first mortgage. Compare the two structures side by side.
Is cash-out money taxed?
Loan proceeds are not income — you are borrowing, not earning — so the cash itself is not taxed. Whether the interest is deductible depends on use: generally it must fund improvements to the home that secures the loan. Confirm your situation with a tax professional.
Cash-out refi or a HELOC for the same money?
The refi replaces your first mortgage — worth it when its rate beats your current one — while a HELOC or home equity loan leaves the first mortgage untouched, usually the better move when your existing rate is low. The HELOC vs Home Equity Loan Calculator prices the second-lien options.