Cash out vs Rate and Term Refinance calculator
Both a cash out refinance and a rate and term refinance replace your entire mortgage with a new one, the real question is just what taking extra cash out actually costs you every month. This calculator runs both on the same starting mortgage so the real cost of the cash is visible in dollars.
Taking $40,000 in cash changes two things about the loan at once.
- •The loan amount rises from $280,000 to $320,000, the extra $40,000 you are borrowing.
- •The cash out rate of 6.875% runs higher than the 6.625% rate and term rate, because lenders typically charge more for the added risk of a cash out loan.
- •Together, the bigger balance and the rate difference make the cash out payment $2,102 a month versus $1,793 a month for the rate and term refinance, a difference of $309 a month for the $40,000 in cash.
| Metric | Cash out | Rate and term |
|---|---|---|
| New loan amount | $320,000 | $280,000 |
| Rate | 6.875% | 6.625% |
| Monthly payment | $2,102 | $1,793 |
| Closing costs | $8,000 | $7,000 |
| Total interest over the new term | $436,782 | $365,433 |
| Total cost, interest plus closing, cash out amount excluded | $444,782 | $372,433 |
The total cost row in the comparison table compares interest and closing costs only, it does not count the $40,000 you actually receive in the cash out option, since that money is yours either way, spent or invested, not a cost. This is a planning estimate, actual rates, costs, and eligibility depend on your lender and credit profile.
A free account keeps your numbers ready across every calculator, no re entering them each time.
How this calculator works
- Step 1Enter your current mortgage
Balance, rate, and years left, shared by both options.
- Step 2Enter the cash out amount
How much extra you want, plus a rate for each refinance type since cash out often runs slightly higher.
- Step 3See the real cost of the cash
Monthly payment and total interest for each, side by side.
Frequently asked questions
Why would a cash out refinance have a different rate than a rate and term refinance?
Lenders generally see a cash out refinance as slightly higher risk, since the loan to value ratio rises and the borrower is pulling equity out rather than just improving their rate or term. It commonly comes with a rate somewhere around 0.125 to 0.5 percentage points higher, though this varies by lender and credit profile, both rates are separately editable here.
Is a rate and term refinance the same as just keeping my mortgage as is?
No, a rate and term refinance still replaces your entire mortgage with a new one at a new rate or term, it just does not add any extra cash to the loan amount the way a cash out refinance does. Both options here reset your loan to the same new term, only the loan amount and rate differ.
Does this account for closing costs?
Yes, each option has its own editable closing cost figure, since a cash out refinance can run slightly higher due to the larger loan amount. Total cost figures include those closing costs, not just the interest.
More refinancing calculators
Compare your current payment to a new rate and term, and see the break even point.
The total dollar question: how much refinancing saves or costs over the full loan life.
Your new payment after rolling extra cash into a new mortgage, and whether there is a real break even.
Every number on this page is a planning estimate, for informational and educational purposes only, not professional advice.
Before you act on any major decisions, consult a qualified accountant, tax advisor, or financial advisor who knows your full picture.