Refi Cash-Out vs Rate-Term Calculator
Compare cash-out refinance vs rate-term refinance options. Calculate available cash and payment differences.
How it works
Rate-term: refinance current balance only. Cash-out: borrow up to 80% of home value, pocket the difference.
Example
$200K balance, $400K value: Rate-term = $200K loan, Cash-out = $320K loan (80% LTV), $120K cash out.
FAQ
What's the difference between rate-term and cash-out refinance?
Rate-term refinances only the existing balance to get better terms. Cash-out borrows more than you owe, giving you cash but increasing loan balance.
Do cash-out refinances have higher rates?
Usually 0.125-0.25% higher than rate-term refinances due to increased lender risk from higher loan amounts and cash extraction.
What's the maximum cash-out amount?
Typically 80% LTV for investment properties, 85-90% for primary residences. Amount depends on appraisal value minus current loan balance minus closing costs.
When does cash-out refinancing make sense?
When you can invest the cash at higher returns than the mortgage rate, need funds for improvements, or want to diversify from real estate concentration.
What are the tax implications?
Cash-out proceeds aren't taxable income, but interest deductibility may be limited if funds aren't used for property improvements. Consult tax professionals.