How this number is made
A cash-out refinance replaces the old loan with a larger one. The cash you leave the closing with is the new loan minus the payoff and the costs. The payment is on the whole new loan, not on the cash.
- Payoff is the amount the old servicer wants, not the balance from a year ago.
- Costs are the costs you do not pay separately in cash.
Formula
Cash to you = new loan − payoff − costs. Payment is the amortizing payment on the new loan.
Worked example
With the figures already in the form, cash after payoff and costs is $54,000.
Questions
Why is the cash smaller than the equity?
The lender does not lend 100% of the value, and closing costs come out. Equity and cash-out are different numbers.
Is the interest deductible?
Interest on the portion used to buy or improve the home is treated differently from interest on cash used for other things. This page does not sort that.