Cash-Out Refinance Calculator

A cash-out refinance allows homeowners to obtain funds at lower interest rates compared to credit cards or unsecured personal loans. This process involves replacing your existing mortgage with a new one that is higher in amount, incorporating the cash amount borrowed against your home equity along with the remaining balance of your original mortgage.

To easily calculate cash-out refinance costs, you can use the Total Mortgage calculator. This tool helps you determine your new mortgage payments, making it easier to understand the financial impact of your decision. 

• Home Value and Mortgage Balance: Start by entering the current market value of your home and the outstanding balance of your existing mortgage. This helps establish how much equity you have in your home.

• Loan Term and Interest Rate: Choose the loan term (e.g., 15, 20, or 30 years) and enter the interest rate. You can find current refinance rates on our Total Mortgage website. Selecting different loan terms and rates will help you see how your monthly payments and total interest costs will vary.

• Taxes & Insurance: Estimate the amount of cash you want to take out. This is optional, depending on your needs, but it should not exceed the maximum allowable loan-to-value ratio set by lenders.

• Calculate Cash-out Refinance Cost:  Estimate the amount of cash you want to take out. 

 

What Do Cash-Out Refinance Costs Include? 

Most people pay 2% to 6% refinance closing costs with a cash-out refinance. The closing costs on a cash-out refinance are similar to what you pay on a home purchase loan. 

The costs include: 

• Application fees

• Appraisal fees

• Flood certification costs

• Origination fees

• Title search fees

• Title insurance premiums 

You will have the option of paying them out-of-pocket or subtracting them from your cash-out funds. Some may even provide you with a no-closing-cost refinance opportunity. However, this decision will come at a price; your lender may raise the loan amount or charge you a higher interest rate. This will result in a larger monthly payment and more interest. 

Important Note: Your cash-out refinance is backed by your asset (home). If you miss payments, your home could eventually go into foreclosure. 

For more information, get in touch with Total Mortgage experts. 

 

How Do You Reduce Monthly Mortgage Payments With A Cash-Out Refinance? 

If your current rates have dropped significantly, a cash-out may result in you paying less per month on your mortgage as long as the new lower rate more than compensates for borrowing an additional amount above what you already own. 

For instance, suppose you bought a half-million-dollar house with a $350k mortgage at 7% fixed interest and will pay the bank back approximately $2,329 monthly for 30 years. If that was a few years ago, you only have $200k left on your loan. 

If you were to upgrade your property, you would need an additional $25,000 ($225,000 total) at a 6% mortgage interest rate. However, your new monthly payment would only be $1,349! After $25,000 in extra equity ($50K total) for the exact amount of your current mortgage with a lower rate, you save $980 monthly using our refinance calculator mortgage cash-out tool.

 

What Amount Of Equity Do You Need For A Cash-Out Refinance? 

The amount of equity you need depends on the type of cash-out refinance you’re considering. With FHA and conventional loans, you can borrow up to 80% of your home's value. This is known as the loan-to-value (LTV) ratio. If you’re going with a VA loan, which is backed by the U.S. Department of Veterans Affairs, you can borrow up to 90% of your home’s value.

Here’s a simple example: Imagine your home is worth $450,000, and you still owe $300,000 on your current mortgage. That leaves you with $150,000 in equity. With an 80% LTV ratio, you could potentially borrow up to an additional $60,000. To figure this out, multiply your home's value by 80% (which gives you $360,000) and then subtract the amount you still owe ($300,000). So, $360,000 - $300,000 = $60,000.

 

FAQs

What are the eligibility criteria for cash-out refinance?

To qualify for a cash-out refinance, you generally need:

• Credit Score: At least 580 for FHA loans or 620 for conventional loans. VA loans often require a score of 620.

• Debt-to-Income Ratio: 50% or lower. Some lenders may have stricter limits.

• Home Appraisal: A recent appraisal to confirm your property’s value and available equity.

• Documentation: Proof of assets, employment, and income, like bank statements, pay stubs, and tax returns.

 

How can I calculate the amount I can get from a cash-out refinance?

To calculate how much you can get from a cash-out refinance, follow these four steps:

1. Determine the Maximum LTV Ratio: Check the maximum loan-to-value (LTV) ratio for your loan program.

2. Calculate the Loan Amount: Multiply the maximum LTV ratio by your home's estimated value.

3. Subtract Your Current Loan Balance: Take the result from step 2 and subtract what you still owe on your mortgage.

4. Get Your Cash Amount: The final number is the amount of cash you could potentially receive from the refinance.

 

How can I find the best lenders for a cash-out refinance?

Start by shopping around to compare options. Apart from just checking with your current lender, get quotes from at least 2-3 other lenders. Explore online reviews or ask family and friends for recommendations.

When comparing offers, consider both the interest rates and annual percentage rates (APRs). Also, consider how long you plan to stay in your home. Refinancing might not be worth it if you're considering moving soon.