In the USA, House value has increased by 45% (2020-2025). If you have $100,000+ equity in your home, you can awaken your “slack money” through cash-out refinance!
What is Cash-Out Refinance?
- Old Loan Exchange: Pay off existing mortgage with new loan
- Equity Withdrawal: Take cash from remaining value of house
- Example:
House value: $500,000
Remaining Mortgage: $200,000
Can withdraw: $150,000 cash (up to 80% LTV)
How does Refinance Calculator work? 3 Steps to Start:
- Enter your data:
- House price: $450,000
- Remaining loan amount: $180,000
- Cash demand: $100,000
- New loan interest: 6.5%
- Calculator:
- New loan amount: $280,000 ($180k old + $100k cash)
- Monthly loan amount: $1,770 (30 years)
- Closing interest rate: $8,400 (3%)
- Loan-to-Value (LTV):
($280,000 / $450,000) × 100 = 62% (Safe!)
(Try: Bankrate.com or Zillow Refi Calculator)
4 Benefits (US Context):
- Debt Consolidation:
Credit card interest (24% APR) → 6.5% APR = $10,000/year savings - Home Renovation:
Kitchen upgrade ($50,000) can reduce home cost by $75,000 - Children’s Income:
College fees ($30,000/year) can be easily managed - Do Good Work:
Old loan was 8%? Now 6.5% = $200/month savings
When is it right? (US Rules)
| Situation | Cash-Out Refi Suitable? |
|---|---|
| Credit Score 680+ | Yes |
| LTV < 80% | Yes |
| 5+ Years Remaining | Yes |
| Interest Rates Falling | Yes |
| Credit Score < 620 | No |
| Plan Shift City in 2 Year | No |
Better Alternatives:
- HELOC:
Line of credit from equity (use only as much as you want) - Personal Loan:
Up to $50,000 @ 8% APR (credit score 700+) - Cash-Out ARM:
If the loan amount is low (first 5 yr 4.5%)
Real US Example:
Ahmed & Ayesha (California):
- House price: $750,000
- Bank loan: $250,000
- Cash out: $200,000
- Istemal:
✓ Medical debt payoff: $50,000
✓ Solar panels: $40,000
✓ Daughter’s wedding: $60,000 - Monthly amount: $2,100 → $3,800 (24% credit card debt eliminated!)
How to Apply:
- Credit Score Check:
Check it for free on CreditKarma.com (680+ required) - Calculate LTV:
(Existing loan + Cash needed) / Home value < 80% - Compare Lenders:
Rocket Mortgage, Better.com, Local credit unions - Lock Rate:
Fix the rate before paying the loan amount
“Equity withdrawal calculation is required – the calculator is your insurance against mistakes!”
Conclusion:
Cash-out refinance is America’s #1 equity access scheme, let’s ask 3 questions:
1) What is the new amount in the budget?
2) How will I pay the closing costs?
3) Will this money give 2x return in 5 years?
(For free consultation call HUD Housing Counselor (800-569-4287))