Calculator
Cash-out refinance calculator
A cash-out refinance replaces your current mortgage with a larger one and hands you the difference in cash. The catch is that the new rate applies to the whole balance, not just the cash.
What a cash-out refinance really costs
You're not getting free money — you're converting home equity into a bigger loan you'll repay with interest. Lenders typically cap the new loan at 80% of your home's value.
If your existing rate is well below today's, refinancing the entire balance to reach the cash can be an expensive way to borrow. Compare it against a second-lien option first.
- Loan-to-value cap: conventional cash-out usually stops at 80% of appraised value.
- New rate on everything: the higher rate applies to your full balance, not just the cash.
- Closing costs: expect roughly $3,500–$6,000 in Michigan, often rolled into the loan.
- Tax-free proceeds: the cash is borrowed equity, so it isn't treated as income.
Run a rate-and-term comparison in the refinance break-even tool, or keep your first mortgage intact and draw equity through a different equity route. Veterans should also check whether a VA cash-out loan reaches a higher limit than a conventional one.
Frequently asked questions
How much equity can I pull out with a cash-out refinance in Michigan?
Most lenders let you borrow up to 80% of your home's value on a conventional cash-out refinance, leaving 20% equity behind. On a $350,000 Michigan home with a $200,000 balance, that ceiling is $280,000 — so up to about $80,000 in cash before closing costs. VA cash-out loans can sometimes reach higher.
Is the cash from a cash-out refinance taxable?
No. Because you are borrowing against your own equity rather than earning income, the cash is not taxed. What changes is your mortgage: a larger balance and, often, a new rate on the whole loan. That trade-off is the real cost to weigh, not taxes.
Cash-out refinance or HELOC — which is better?
A cash-out refinance replaces your entire mortgage at one new rate, which hurts if your current rate is low. A HELOC leaves the first mortgage untouched and lets you draw only what you need. If you like your existing rate, a second-lien HELOC usually protects it better.