How do you use a cash-out refinance calculator?


Quick Answer

Discover's web-based cash-out refinance calculator requires you to input data on the current market value of your home and, where applicable, outstanding mortgage balance to get results, details its website. USA Home Financing's online cash-out calculator needs similar information to generate required results, reports its website.

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Full Answer

Cash-out refinancing enables owners to convert existing home equity into cash, notes NerdWallet. To accomplish this, homeowners refinance their current mortgages with new, larger loans and receive the difference between the two loans in cash. This means a qualifying homeowner with a house worth $400,000 and a mortgage balance of $100,000 may be able to get up to $300,000 in cash.

Among other advantages, cash-out mortgage refinancing typically offers lower interest rates than home equity loans and home equity lines of credit, explains NerdWallet. As it allows property owners to receive a lower interest rate, this form of refinancing makes sense in cases where the existing interest rate is lower than when the owner first purchased his home. In situations where cash-out refinancing rates are low, homeowners can leverage it to clear high-interest credit card debt it in full.

Homeowners wanting to lock in lower interest rates but who do not need the cash should opt for regular refinancing, advises NerdWallet.

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