Cash-Out Refinance Calculator Formula

Understand the math behind the cash-out refinance calculator. Each variable explained with a worked example.

Use the Cash-Out Refinance Calculator

Formulas Used

Net Cash Received

net_cash_received = cash_out_amount

New Monthly Payment

new_monthly_payment = new_payment

Current Monthly Payment

current_monthly_payment = current_payment

Monthly Payment Change

payment_change = new_payment - current_payment

New Total Loan Amount

new_loan_total = new_loan_amount

New LTV Ratio

new_ltv_pct = new_ltv

Variables

VariableDescriptionDefault
home_valueCurrent Home Value(USD)500000
current_balanceCurrent Mortgage Balance(USD)300000
current_rateCurrent Mortgage Rate(%)6.5
current_remaining_yearsRemaining Years on Current Loan(years)25
cash_out_amountCash-Out Amount(USD)50000
new_rateNew Loan Rate(%)7
new_term_yearsNew Loan Term(years)30
closing_costsRefinance Closing Costs(USD)6000
new_loan_amountDerived value= current_balance + cash_out_amount + closing_costscalculated
new_ltvDerived value= new_loan_amount / home_value * 100calculated
r_currentDerived value= current_rate / 100 / 12calculated
n_currentDerived value= current_remaining_years * 12calculated
current_paymentDerived value= r_current > 0 ? current_balance * r_current * pow(1 + r_current, n_current) / (pow(1 + r_current, n_current) - 1) : current_balance / n_currentcalculated
r_newDerived value= new_rate / 100 / 12calculated
n_newDerived value= new_term_years * 12calculated
new_paymentDerived value= r_new > 0 ? new_loan_amount * r_new * pow(1 + r_new, n_new) / (pow(1 + r_new, n_new) - 1) : new_loan_amount / n_newcalculated

How It Works

Cash-Out Refinance Overview

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

How It Works

1. New Loan Amount = Current Balance + Cash-Out + Closing Costs 2. You receive the cash-out amount at closing 3. Your payment is recalculated on the new, larger balance

When It Makes Sense

  • Consolidating high-interest debt
  • Funding home improvements that increase value
  • Investing in additional property
  • When the new rate is similar to or lower than your current rate

    • Risks

  • Increases your total debt and LTV
  • Resets your amortization clock
  • Closing costs reduce the effective cash received

    • Worked Example

    A $500,000 home with $300,000 balance at 6.5% (25 years remaining). Cash out $50,000 with a new 30-year loan at 7% with $6,000 closing costs.

    home_value = 500000current_balance = 300000current_rate = 6.5current_remaining_years = 25cash_out_amount = 50000new_rate = 7new_term_years = 30closing_costs = 6000
    1. 01New loan amount: $300,000 + $50,000 + $6,000 = $356,000
    2. 02New LTV: $356,000 / $500,000 = 71.2%
    3. 03Current payment: $300,000 over 25 years at 6.5% = $2,028.28/month
    4. 04New payment: $356,000 over 30 years at 7% = $2,368.44/month
    5. 05Payment increase: $2,368.44 - $2,028.28 = $340.16/month
    6. 06You receive $50,000 cash at closing

    Ready to run the numbers?

    Open Cash-Out Refinance Calculator