Cash Out Refinance Break Even Calculator
A cash-out refinance replaces your existing mortgage with a larger one and hands you the difference in cash. The break-even question is different from a rate-and-term refi: you must weigh the ongoing cost of a higher balance and often a higher rate against the value you get from deploying that cash. Enter both scenarios above to find your crossover point.
Now, and the offer
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- Payment now
- $0.00
- Payment after
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- Saved each month
- $0.00
- Closing costs
- $0
- Interest over the full life
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A positive lifetime figure means the new loan costs more in total interest even though the monthly payment fell — usually because the term restarted. Both numbers matter.
How Cash-Out Refi Differs From Rate-and-Term
In a rate-and-term refinance, the new loan replaces the old balance and the goal is a better rate or shorter term. A cash-out refi intentionally increases the loan balance, which raises the monthly payment even if the rate stays flat. Lenders typically charge a slightly higher rate for cash-out transactions because the larger loan-to-value ratio represents greater risk.
For example, a borrower who owes $200,000 on a home worth $350,000 might take a new $260,000 loan, pocketing $60,000 after closing costs. The payment rises because the balance is $60,000 larger, and the rate may be a fraction higher as well. Over 30 years, that combination adds substantially more interest than a simple rate swap.
Most conventional lenders cap cash-out LTV at 80 percent of the appraised value. FHA allows up to 80 percent as well but calculates from the appraised value rather than the purchase price if the home has been owned for less than a year.
Deciding Whether the Cash Is Worth It
The answer depends entirely on what you do with the money. Using cash-out proceeds to consolidate high-interest debt can produce a net saving if the blended rate falls and you do not run the paid-off cards back up. Using it for a home renovation that raises the property's value may offset the larger loan. Using it for discretionary spending rarely passes the break-even test.
To evaluate properly, compare the total interest on the new larger loan against the total interest remaining on the old one, then subtract whatever return or saving the cash delivers. The calculator does this automatically when you enter both the current and proposed terms alongside the cash amount.
Before proceeding, also check the standard refinance break-even calculator and the closing costs estimator. Cash-out transactions often carry higher closing costs due to appraisal requirements and lender fees, and those costs are part of the true break-even equation.
Cash-out proceeds and rates shown depend on the values you enter. Tax implications of cash-out refinancing vary — consult a tax professional for your situation.