How to use our cash-out refinance calculator
A cash-out refinance can be an affordable way to access funds, often with lower interest rates than credit cards or personal loans. It replaces your existing mortgage with a new one that combines your current loan balance and the cash you borrow against your home equity.
Cash-out refinance costs
Expect to pay between 2% and 6% of your loan amount in closing costs, similar to a home purchase loan. Here’s what to consider:
- Loan Origination Fee: 0.5%–1% of the loan amount.
- Appraisal Fee: Cost of determining your home’s value.
- Title Insurance & Search Fees: Ensures your property has a clear title.
- Closing Costs: Includes document preparation, recording fees, and attorney fees.
- Prepaid Costs: Covers property taxes, homeowner’s insurance, and prepaid interest.
- Private Mortgage Insurance (PMI): May apply if your loan exceeds 80% of your home’s value.
- Points (Optional): Pay upfront to reduce your interest rate.
Closing costs can often be rolled into your loan. However, this may increase your monthly payment and overall interest. Use OwnUp’s cash-out refinance calculator to decide if refinancing makes sense for your financial goals.
Cash-out refinance FAQs
What is a cash-out refinance?
A cash-out refinance is a way to replace your current mortgage with a new, larger loan. The extra money you borrow comes from the equity you’ve built in your home, and you receive the difference in cash. You can use this cash for things like home improvements, paying off debt, or other expenses.
Is Now the Right Time for a Cash-Out Refinance?
Refinancing to take cash out can be a good idea if it helps you achieve important financial goals, like renovating your home, paying off high-interest debt, or covering major expenses. To decide if it’s the right time, consider two things: your current mortgage rate compared to today’s rates and how much home equity you have. If you can secure a lower rate and still have enough equity left, it could be a smart move.
How Can I Get a Good Rate on a Cash-Out Refinance?
To secure a great rate, focus on a few key factors: keeping a good credit score, managing your debt-to-income ratio, and having enough home equity. These help lenders see you as a strong borrower. You can shop around for the best rates or work with us to find the most competitive option that fits your financial needs.
What Are the Risks of a Cash-Out Refinance?
A cash-out refinance can be a useful way to access extra cash, but it’s important to understand the risks. Borrowing more than you need could increase your monthly mortgage payment, making it harder to manage. If home values go down, you might end up owing more than your home is worth. Since your home secures the loan, it’s important to be sure you can comfortably afford the new payment. A trusted lender will guide you through the process, helping you make a smart decision that works for your financial future.
