Cash Out Refinance Calculator

What Is a Cash Out Refinance?

A cash out refinance replaces your current mortgage with a new, larger loan. The difference between your old mortgage balance and the new loan amount is paid to you in cash.

In simple terms:

You borrow against your home equity.

Home equity is the difference between your home’s current value and what you still owe on your mortgage.

Example:

• Home value: $400,000
• Current mortgage balance: $200,000
• Equity: $200,000

With a cash out refinance, you may be able to borrow a portion of that $200,000 and receive it as cash.

What Does a Cash Out Refinance Calculator Do?

A cash out refinance calculator estimates:

1. Maximum cash you can take out
2. New total loan amount
3. New monthly payment (principal and interest)
4. Remaining home equity

It uses five key inputs:

• Current home value
• Current mortgage balance
• Maximum loan-to-value (LTV)
• New interest rate
• New loan term

From those numbers, it calculates what you may qualify for based on standard lending rules.

Understanding the Key Inputs

Let’s break down each field in the calculator so you know exactly what you’re entering.

1. Current Home Value

This is what your home is worth today.

You can estimate this using:

• A recent appraisal
• Online home value tools
• A comparative market analysis from a real estate agent

Accuracy matters. A higher value increases your available equity.

2. Current Mortgage Balance

This is how much you still owe on your existing loan.

You can find it on:

• Your latest mortgage statement
• Your lender’s online portal

The lower your balance, the more equity you likely have available.

3. Maximum Loan-to-Value (LTV)

Loan-to-value (LTV) is the percentage of your home’s value that a lender allows you to borrow.

Most lenders allow 75% to 80% LTV for a cash out refinance.

Example:

• Home value: $400,000
• Max LTV: 80%
• Maximum loan allowed: $320,000

If you owe $200,000, you could potentially take out:

$320,000 – $200,000 = $120,000 cash

The calculator performs this exact formula automatically.

4. New Interest Rate

This is the rate on your new refinanced mortgage.

Even a small difference in rate can change your monthly payment significantly.

Example:

• 6.5% vs 7.5% makes a noticeable difference over 30 years.

The calculator converts this rate into a monthly rate and applies a standard mortgage payment formula.

5. New Loan Term

You can usually choose:

• 30 years
• 20 years
• 15 years
• 10 years

Longer term:

• Lower monthly payment
• More total interest paid

Shorter term:

• Higher monthly payment
• Less interest over time

How the Calculator Computes Results

The calculator performs these steps behind the scenes:

Step 1: Calculate Maximum Loan Amount

Max Loan = Home Value × LTV

Step 2: Calculate Maximum Cash Out

Cash Out = Max Loan – Current Mortgage Balance

If the result is negative, you are not eligible because your current loan exceeds the allowed LTV limit.

Step 3: Calculate Monthly Payment

It uses the standard mortgage payment formula:

If interest rate > 0:

Monthly Payment = 
Loan × (r × (1+r)^n) / ((1+r)^n − 1)

Where:

• r = monthly interest rate
• n = total number of payments

If the rate is 0%, it simply divides the loan amount by the total number of months.

Step 4: Calculate Remaining Equity

Equity Remaining = Home Value − Max Loan

This shows how much ownership you keep in the home after refinancing.

Example Calculation

Let’s walk through a realistic example.

• Home value: $400,000
• Current balance: $200,000
• LTV: 80%
• New rate: 7.5%
• Term: 30 years

Step 1:
Max loan = $400,000 × 0.80 = $320,000

Step 2:
Cash out = $320,000 − $200,000 = $120,000

Step 3:
New loan amount = $320,000

Step 4:
Monthly payment (approx.) = $2,237

Step 5:
Equity remaining = $80,000

This gives you a clear snapshot of what refinancing could look like.

When Does a Cash Out Refinance Make Sense?

A cash out refinance can be useful when:

• You need funds for home improvements
• You want to consolidate high-interest debt
• You’re paying for education expenses
• You need liquidity for major life events

It often works best when:

• You have strong equity
• Interest rates are reasonable
• You plan to stay in the home long enough to recover closing costs

Pros and Cons of Cash Out Refinancing

Pros

• Access to large amounts of cash
• Often lower rates than credit cards or personal loans
• One single monthly payment

Cons

• Increases total mortgage balance
• Extends repayment timeline
• Closing costs apply
• Risk of foreclosure if payments aren’t made

Always compare this option with alternatives like a home equity loan or HELOC.

Important Disclaimer

Most calculators, including the one above, assume:

• Principal and interest only
• No taxes or insurance included
• No closing costs factored in

Your real payment may be higher once escrow and fees are added.

Why Use a Cash Out Refinance Calculator First?

Before talking to a lender, a calculator helps you:

• Estimate eligibility
• Compare loan terms
• Test different interest rates
• Plan monthly affordability

It saves time and gives you negotiating confidence.