Mortgage Cash Out Refinance Calculator

Generally, you need a minimum of 30 percent to 40 percent equity in the property to qualify for a cash out refinance. A mortgage cash out refinance calculator helps determine if you have enough equity in your home to qualify based on the information you input into the calculator, including things like your home value and how much cash you need.

How the Mortgage Cash Out Refinance Calculator Works

The mortgage cash out refinance calculator works by inputting data such as how much your home is worth and how much you want to borrow, and it will tell you your estimated monthly mortgage payment. Keep in mind that the calculator doesn’t include closing fees or points, which we discuss further below.

The cash out refinance calculator also doesn’t take into account your personal credit history, so it’s important to speak directly to a lender, like Visio Lending, who can give you an exact break down of what it will cost you.

Mortgage Cash Out Refinance Calculator Inputs

When using the cash out refi calculator, you will be prompted to enter your property’s current value, the total current balance owed, how much cash you’ll take out, your desired interest rate and your desired loan term. We’ll explain each in detail below.

Property’s Current Value

You can get an estimate of your home’s value by asking a real estate agent for a comparative market analysis. Ultimately, the lender will order an appraisal to determine the fair market value but in the beginning, an estimate of your home’s value is fine.

Current Balance Owed in Total on Property

You will find your mortgage balance on your most recent mortgage statement, either online or in paper form. Make sure to include the total balance on your first mortgage, second mortgage, your HELOC, etc.

How Much Cash You’ll Take Out

The next thing the calculator asks is how much cash you want to take out. You can just input an estimate of what you think you need because your lender will give you the exact amount you qualify for, which is generally 75 percent LTV or less.

Desired Interest Rate for Cash Out Mortgage

The mortgage rate you enter can, once again, be an estimate because your lender will let you know what your actual rate will be. You can get an idea of investment property rates here that are updated monthly.

Desired Repayment Term

Generally, a cash out refinance will be for a term of either 15 years or 30 years. You can choose which term you want and your estimated mortgage payment will reflect the term you chose.

Cash Out Refinance Calculator Outputs

Based on all of your inputs, the calculator figures out the loan to value (LTV), which is calculated by dividing the loan amount by the property value. Other outputs include your new mortgage balance and your new monthly mortgage payment.

Keep in mind that the cash out refinance calculator gives you an idea if you and your investment property will qualify for a cash out refi, but it’s not a guarantee. The lender you choose to work with will ultimately determine if you qualify for a cash out refinance based on your qualifications and the LTV of your home.

Loan to Value (LTV)

LTV is one of the most important factors that mortgage lenders consider when evaluating a cash out refinance application. Generally, a lender will lend on an LTV up to 75 percent. The lower the LTV, the lower risk the loan has, so that means the lender may be more lenient on other things like credit score or amount of cash reserves.

New Mortgage Balance

Your new mortgage balance is the sum of your principal and interest, and will be the total amount of your loan. The calculator will give you a new mortgage balance once you select your inputs. The calculator does not factor in any closing costs, points, and other fees that you may be subject to and which can increase the total cost of a cash out refi.

New Monthly Mortgage Payment

The new mortgage payment will be the amount of your regularly scheduled mortgage payment, which includes the principal and interest. The calculator will give you your new mortgage payment as an output after you have selected your inputs, such as your property’s current value.

Cash Out Refinance Costs, Terms & Qualifications

When you apply for a cash out refinance, you should be familiar with all of the costs involved and what influences those costs. Each lender has their own costs, but generally cash out refis are pretty standard and tend to have rates starting at 3.9 percent or higher and terms up to 30 years, with closing costs of two percent to five percent of the loan amount.

Cash Out Refi Rates & Costs

Rates for a cash out refinance are:

• Rates: 3.9% – 7%
• Lender Fees: 0% – 3%
• Closing Costs: 2% – 5%

Generally, the cash out refinance rate is lower than the rate on your original loan and your new rate can either be fixed or variable. However, you should keep in mind that your rate may be lower but there are some additional fees to consider, such as closing costs.

These closing costs, which include loan origination fees for creating and funding a new loan, are usually taken directly out of the new loan. This saves you from paying out-of-pocket costs, but it reduces the amount of cash you receive from the cash out refinance.

Cash Out Refi Loan Amount & Term

The loan amount and term for a cash out refinance are generally:

• Loan Amount for One Unit: Up to 75% LTV
• Loan Amount for 2 – 4 Units: Up to 70% LTV
• Term: 15 – 30 years
• Funding Time: 30 – 45 days

Borrowers with a few years left on their original loan often refinance into a new mortgage with a 15- to 30-year term, so it’s important to keep in mind that your mortgage “resets” once you do a cash out refinance. Your old mortgage is paid off and you have a new mortgage with a new term, a new rate, new costs, etc.

Cash Out Refi Loan Qualifications

The minimum requirements for a cash out refinance approval are generally:

• Credit Score: 640+ (check your credit score for free here)
• Debt-to-Income Ratio: 36% – 45%
• Cash Reserves: 0 – 6 months
• Property Status: Property can’t be listed for sale at the time of loan application
• Seasoning: Property must be owned for six-plus months
• Equity: 30% – 40% in an existing property: owner-occupied primary residence or a non-owner-occupied investment property
• Cash Reserves: six-plus months
• Personal Tax Returns: two years
• Debt Service Coverage Ratio (DSCR): 1.25, shown by providing a current lease
• Zip Code: Some lenders are regional and rates can slightly vary in different areas

The higher the credit score, the lower the required debt-to-income ratio and the lower the minimum required cash reserves. This is because cash out refis for investment properties can be risky for lenders. Generally, the loan obtained through a cash out refinance can’t be more than 75 percent of the property’s fair market value (FMV), so that’s why 30 percent to 40 percent equity is needed to qualify for a cash out refinance.

Documentation Needed When Applying for a Cash Out Refinance

Lenders that offer a cash out refinance require certain documentation to qualify for and get approved for the loan. If you work with your existing lender, they will have some of your documentation already, but if you choose a new lender, then you will need to provide certain things like your current mortgage statements.

Generally, you will need the following to apply for a cash out refinance:

• Property Information: Address, type of property, square footage, condition, rent roll and occupancy rate
• Mortgage Statements: Showing how long you have had the loan and that you’re in good standing
• Current Leases: Dated and signed leases for each unit
• Cash Reserves: Six-plus months shown on bank statements
• Loan Application: This will ask for your personal information such as your full name, address, date of birth, Social Security number, and current occupation

The lender will order an appraisal after you fill out the loan application, and the appraisal will tell you what the current value of the property is. Then the lender will let you know how much you qualify for based on the value of the property and the LTV. Each lender has their own LTV requirements; they determine these based on the borrower and property qualifications, as well as the type of loans they offer.

For a more thorough overview of how a cash out refinance works, what documents you need and much more, check out our in-depth guide to a cash out refinance.

Who a Cash Out Refinance Is Right For

A cash out refinance is right for investors who have equity in an investment property and want to take some cash out for a specific purpose. It’s right for investors who meet certain lender qualifications such as a minimum credit score of 640. It can be right for long-term investors who want to purchase an investment property or fix-and-flippers who want to start their next project.

A cash out refinance is generally right for the following:

• Investors who want to use the cash to repair the property
• Investors who want to use the cash to purchase another property
• Investors who want to buy a business with the cash

Alternatives to a Cash Out Refinance

If you realize that your investment property doesn’t have enough equity to qualify for a cash out refinance or if a cash out refinance just isn’t the right option for you at the moment, then there are some solid alternatives.

Alternatives to a cash out refinance include:

• Investment property line of credit: The borrower receives a predetermined amount of credit and you only pay interest on the amount you use, which is ideal for an investor who owns multiple properties.
• Home equity line of credit: A HELOC is a revolving line of credit secured by your home and is right for you if you have equity in your primary residence.
• Small business credit card: This is an unsecured line of credit that allows the borrower to pay for a purchase interest-free for 30 days, which is great for investors who don’t want to have a lien against a property.

Bottom Line

A mortgage cash out refinance calculator is a great tool to use to start the cash out refinance qualification process. You can input your property value, your current mortgage balance, your location and your credit score. The calculator will take your inputs and give you an idea if you will qualify based on your qualifications and the property’s LTV.