This calculator is built using industry-standard mortgage amortization formulas and estimated closing cost calculations. Always consult a licensed mortgage professional for actual rates and terms.
Use the Cash Out Mortgage Refinance Calculator to estimate your new loan amount, monthly payment, and remaining home equity after taking cash out from your property. This tool helps you compare your current situation with your refinance goal.
Cash Out Mortgage Refinance Calculator
Estimated New Monthly Payment:
Cash Out Mortgage Refinance Calculator Formula
The calculation involves two main parts: determining the Total New Loan Amount (L) and calculating the New Monthly Principal & Interest Payment (M).
1. Total New Loan Amount (L):L = (CB + C) / (1 - CC_pct / 100)2. New Monthly Payment (M):
r = New Interest Rate / 1200 (Monthly Rate) n = New Loan Term in Years * 12 (Total Months) M = L * [ r * (1 + r)^n / ((1 + r)^n - 1) ]
Variables
- Current Mortgage Balance (CB): The principal amount you currently owe on your existing home loan.
- Current Appraised Home Value (AV): The current market value of your home, usually determined by an appraiser.
- Desired Cash Out Amount (C): The exact amount of money you wish to receive from the refinance transaction.
- New Interest Rate (%): The annual percentage rate (APR) for the new mortgage loan.
- New Loan Term (Years): The duration (e.g., 15, 20, or 30 years) of the new loan.
- Closing Costs (% of New Loan): An estimate of all fees, often financed into the loan, expressed as a percentage of the new total loan amount.
- Maximum Allowable LTV (%): The highest Loan-to-Value ratio your lender permits (e.g., 80%).
Related Calculators
- Loan Amortization Calculator – See the payment schedule for your new loan.
- Mortgage Comparison Calculator – Compare two different mortgage scenarios.
- HELOC Payment Estimator – Explore home equity alternatives to cash-out refinance.
- Refinance Breakeven Calculator – Determine how long it takes for your savings to cover closing costs.
What is Cash Out Mortgage Refinance?
A cash-out refinance replaces your existing mortgage with a new, larger mortgage. You take the difference between the new loan amount and the old loan amount (plus closing costs) in cash. This is a common way for homeowners to access their home equity for purposes like debt consolidation, home improvements, or major purchases.
The total new loan amount is strictly limited by the property’s appraised value and the lender’s Loan-to-Value (LTV) requirement. Most lenders require the LTV to be 80% or less for a standard cash-out refinance, meaning the new loan amount cannot exceed 80% of the home’s value.
How to Calculate Cash Out Refinance (Example)
- Determine the Total Funds Needed: Start by adding your current mortgage balance ($200,000) and your desired cash out amount ($50,000), totaling $250,000.
- Estimate the New Loan Amount (L): If closing costs are 3% of the loan, the actual loan amount must be $250,000 / (1 – 0.03) = $257,731.96.
- Check LTV Limit: If the home value is $350,000 and the maximum LTV is 80%, the maximum loan allowed is $280,000. Since $257,731.96 is less than $280,000, the loan is approved.
- Calculate Monthly Payment: Using the loan amount of $257,731.96, a 6.5% interest rate, and a 30-year term, calculate the new monthly principal and interest payment using the standard amortization formula.
Frequently Asked Questions (FAQ)
Is a cash-out refinance always better than a HELOC?
Not always. A cash-out refinance replaces your primary loan, potentially securing a lower rate for the entire balance but incurring significant closing costs. A HELOC is a secondary loan with variable rates, often fewer closing costs, but requires you to pay two mortgages.
What is the maximum LTV I can have?
While many conventional lenders cap the LTV at 80%, some FHA and VA programs allow up to 85% or even 100% (for VA) LTVs, though this is subject to market conditions and lender specific overlays.
Are closing costs always financed into the loan?
No. While the calculator assumes financing, you can opt to pay the closing costs out-of-pocket, which would reduce your total new loan amount and LTV.
Do I need a new appraisal for a cash-out refinance?
Yes, almost all lenders require a new, current home appraisal to establish the property’s market value, which is crucial for determining the maximum allowable loan amount.