Cash-Out Refinance Calculator

Use Our Cash-Out Refinance Calculator

Use our comprehensive cash-out refi calculator below to explore your refinancing options and see how much cash you could potentially access from your home’s equity.

What Is a Cash-Out Refinance?

A cash-out refinance is a mortgage refinancing loan that replaces your existing loan with a new mortgage for more than you currently owe. The difference between your old loan balance and the new loan is given to you in cash, allowing you to tap into your home’s built-up equity.

When you choose a cash-out refinance, part of your home equity is converted into liquid funds. This process gives you access to potentially large sums of money at mortgage interest rates, which are typically lower than other borrowing options like personal loans or credit cards.

You typically must keep at least 20% equity in your home, which means you can borrow up to 80% of your home’s value. Eligibility requirements generally include steady income, acceptable credit scores, and sufficient equity in your property.

Some options, like FHA cash-out refinance loans, may have more flexible requirements. Additionally, an option like the VA cash-out refinance allows homeowners to borrow up to 100% of the home’s appraised value.

How a Cash-Out Refinance Works

The cash-out refinance process follows several steps that typically take 30 to 45 days to complete. These include:

1. Assess your home equity: Determine your property’s current market value and subtract your outstanding mortgage balance to calculate available equity.
2. Apply for the new loan: Submit your loan application with financial documentation, including income verification, credit history, and asset information, to your chosen lender.
3. Complete the appraisal: The lender orders a professional appraisal to confirm your home’s current value, which directly impacts how much cash you can access.
4. Underwriting review: The lender will review your application and determine your approval status and final loan terms based on their guidelines.
5. Close and receive cash: Sign the new loan documents at closing, where your original mortgage is paid off, and you receive the remaining difference as cash.

Your new loan terms can differ significantly from your original mortgage. The interest rate could be higher or lower depending on current market conditions and your creditworthiness. Your monthly payments will likely increase due to the larger loan amount, and your repayment timeline may be extended if you choose a longer loan term.

Pros and Cons of a Cash-Out Refinance

A cash-out refinance can be helpful if you need access to cash, but it’s important to weigh all aspects before making a decision. The pros of cash-out refinancing are:

• Access to home equity: Your home’s value isn’t liquid, but with a cash-out refinance, you can access the wealth you’ve built in your property, converting it to liquid funds for major expenses or investments.
• Potentially lower interest rates: While the goal of a cash-out refinance isn’t to lower your interest rate, it might be possible to get a lower rate. If mortgage rates today are lower than rates were when you got your loan, you might secure better terms while accessing cash from your home’s value.
• Possible tax advantages: The interest on cash-out refinance payments may be tax-deductible if you use the money for home improvements that add value to your property.
• Competitive borrowing costs: Mortgage rates are typically much lower than credit cards, personal loans, or other financing options for large expenses.

Cash-out refinancing also comes with significant drawbacks for some. The potential cons of a cash-out refinance loan include:

• Increased loan amount: Your total mortgage debt increases substantially, potentially taking years longer to pay off than your original loan.
• Potential foreclosure risk: If you’re unable to make payments, you risk losing your home since the entire loan amount is secured by your property.
• Higher closing costs: Refinancing closing costs typically range from 2% to 5% of the loan amount. This additional cost can add thousands to your borrowing expenses.
• Reduced homeownership: Converting equity to cash decreases your ownership stake in the property, potentially impacting long-term wealth building.

Careful financial planning is crucial because it ensures you can comfortably afford the new payment terms while using the funds wisely.

How to Use the Cash-Out Refi Calculator

Our refinance cash-out calculator requires a few pieces of information to provide accurate estimates:

• Current home value: Enter your property’s estimated current market value, which you can determine using recent comparable sales in your neighborhood or your most recent property tax assessment.
• Current mortgage balance: Input the remaining balance on your existing mortgage, which appears on your most recent mortgage statement.
• New mortgage rate: Enter the interest rate you expect to qualify for based on current market rates and your credit profile.
• New loan term: Select your desired loan term in years, typically 15 or 30 years for most borrowers.
• Desired cash-out amount: Specify how much cash you want to receive from the refinance for your intended purpose.
• Refinance closing costs: Estimate your closing costs.

Understanding Your Results

When reviewing your cash-out refinance mortgage calculator results, you’ll see several outputs that can guide your decision-making process. Here’s how to interpret each number:

• Maximum cash-out amount: This number tells you the highest amount of cash you can access while maintaining the required equity levels in your home according to lending guidelines.
• Adjusted cash-out amount: This shows what you’ll actually receive at closing after paying off your existing mortgage and covering closing costs, giving you a realistic picture of your net cash proceeds.
• New monthly payment: This figure tells you what you’ll pay each month on the new loan, so compare this figure to your current payment to understand the impact on your budget.
• New loan balance: This represents your total mortgage debt after the cash-out refinance is complete.

These numbers connect directly to your long-term financial planning goals. If you’re using the cash for home improvements, calculate the potential return on investment against the increased mortgage costs. For debt consolidation, compare the interest savings against the increased mortgage payment and extended repayment timeline to ensure the strategy makes financial sense.

When a Cash-Out Refinance Makes Sense

Cash-out refinancing can be a strategic financial move in the right circumstances, but timing and purpose matter significantly. Here are situations when cash-out refinancing makes sense:

• High-interest debt consolidation: If you’re carrying credit card balances or personal loans with rates above 8-10%, using home equity to pay off this debt can save thousands in interest charges over time.
• Home improvement investments: Kitchen renovations, bathroom updates, or adding square footage can increase your home’s value while potentially making the mortgage interest tax-deductible.
• Educational expenses: Funding college tuition or advanced degrees often justifies accessing home equity, especially when compared to higher-interest student loan alternatives.
• Investment opportunities: Whether purchasing rental properties or funding business ventures, home equity can provide capital for investments with solid financial projections.
• Emergency financial needs: Major medical expenses or other urgent financial situations may warrant accessing your home’s equity when other options aren’t available.

However, cash-out refinancing isn’t always the best choice. Here are situations when you should avoid cash-out refinancing:

• Short-term homeownership: If you plan to sell your home within three to five years, closing costs may exceed any benefits from accessing the equity.
• Rising interest rates: When current mortgage rates are significantly higher than your existing rate, the increased costs might not justify the cash access.
• Unstable income: If your job situation is uncertain or your income fluctuates significantly, taking on higher mortgage payments creates unnecessary risk.
• Non-essential purchases: Using home equity for vacations, luxury items, or lifestyle expenses puts your home at risk for non-investment purposes.
• Insufficient equity: If you don’t have at least 20-25% equity in your home, you may not qualify or may face unfavorable terms.

Market timing and personal circumstances play crucial roles in refinancing decisions. Working with a trusted lender helps you determine the best timing for your specific situation. Consider cash-out refinance vs HELOC options to ensure you’re choosing the best financing method.

For self-employed borrowers, specialized programs like self-employed cash-out refinance options provide more flexible qualification requirements. Investment property owners might benefit from DSCR cash-out refinance loans that focus on property income rather than personal income verification.

See If a Cash-Out Refinance Is Right for You

Cash-out refinancing can unlock your home’s equity for important financial goals, but success depends on careful planning and choosing the right lender partner. The decision requires balancing immediate cash needs against long-term financial implications, ensuring the new loan terms align with your overall financial strategy.

Griffin Funding specializes in helping homeowners understand cash-out refinancing options with personalized guidance and competitive rates. Our experienced loan officers work with you to evaluate your specific situation and determine if cash-out refinancing supports your financial objectives.

Reach out to learn more, and use the Griffin Gold app to explore your refinancing options. Or, if you’re ready to begin the refinancing process, get started online today!

Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 24 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up with important changes in the industry to deliver the most value to Griffin's clients. Under Lyons' leadership, Griffin Funding has made the Inc. 5000 fastest-growing companies list five times in its 12 years in business.