Money Out Refinance Calculator
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Reviewed by Calculator Editorial Team
Refinancing your mortgage can be a complex financial decision, but understanding the "money out" aspect is crucial. This calculator helps you determine how much extra you'll pay when refinancing, considering fees, closing costs, and the new loan terms.
What is a money out refinance?
A money out refinance occurs when the total amount you pay to refinance your mortgage is more than the amount you receive from the new loan. This typically happens because of high closing costs, fees, and the difference between your current mortgage balance and the new loan amount.
Money out refinancing is common when you're looking to lower your interest rate but end up paying more in total due to additional costs. The key factors that determine whether you'll be in a money out situation include:
- Current mortgage balance
- New loan amount
- Closing costs
- Loan origination fees
- Appraisal fees
- Title insurance
- Prepaid interest
Money out refinancing is different from a cash-out refinance, where you borrow more than your home is worth. In a money out refinance, you're not borrowing additional money, just paying more in total.
How to use this calculator
To use the money out refinance calculator:
- Enter your current mortgage balance
- Enter the new loan amount you're applying for
- Add any closing costs, fees, and other expenses
- Click "Calculate" to see your results
The calculator will show you how much money you'll be "out" after refinancing, as well as the net amount you'll receive from the new loan.
How money out refinancing works
When you refinance, the process typically involves these steps:
- Applying for a new loan
- Paying closing costs and fees
- Receiving the new loan amount
- Paying off your old mortgage
The money out amount is calculated by subtracting the new loan amount from the sum of your current mortgage balance and all additional costs.
Money Out = (Current Mortgage Balance + Closing Costs + Fees) - New Loan Amount
If the result is positive, you're in a money out situation. If it's negative, you're actually saving money on the refinance.
Example calculation
Let's look at an example to understand how this works:
| Item | Amount |
|---|---|
| Current mortgage balance | $200,000 |
| Closing costs | $5,000 |
| Loan origination fee | $2,500 |
| Appraisal fee | $400 |
| Title insurance | $1,200 |
| Prepaid interest | $1,500 |
| New loan amount | $195,000 |
Calculating the money out:
Money Out = ($200,000 + $5,000 + $2,500 + $400 + $1,200 + $1,500) - $195,000
= $210,600 - $195,000
= $15,600
In this example, you would be $15,600 out after refinancing. This means you'd need to come up with this amount from other sources to complete the refinance.
Frequently Asked Questions
What is the difference between money out and cash-out refinancing?
Money out refinancing means you're paying more in total than you're receiving from the new loan, typically due to high closing costs. Cash-out refinancing means you're borrowing more money than your home is worth, which creates equity in your home.
How can I avoid being in a money out situation?
To avoid being money out, look for refinancing options with lower closing costs, shop around for the best interest rates, and consider refinancing with a lender that offers discounts or credits.
What are the typical closing costs for refinancing?
Closing costs for refinancing typically range from 2% to 5% of the loan amount, including fees for appraisal, title insurance, origination, and other services. Exact amounts vary by lender and loan type.