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Cash Out Refinance 30 Year Mortgage Into 15 Year Loan

Should I do a cash-out refinance of a 30 year loan into a 15 year loan? I will use the proceeds to pay off two loans on second home and my car loan.

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

If you can do a cash-out refinance on your current home and use the proceeds to pay-off the two loans on your second home as well as your car loan, then I would definitely do it. Not only do you consolidate four loans into one, but refinancing a 30 year mortgage with a 15 year mortgage can significantly reduce your total interest expense over the life of your loan. In your case, you would be shaving 13 years off your current mortgage which saves you a lot of money. Your monthly mortgage payment on your current home will likely increase because you are refinancing into a shorter-termed loan but your total monthly debt payments and total interest expense over the life of your loans should decrease significantly, potentially by tens of thousands of dollars.

The one issue that you may run into when you do a cash-out refinance is that most lenders permit a maximum loan-to-value (LTV) ratio of 80%, or potentially lower if you are taking out a significant amount of cash. We provide a comprehensive overview of a cash-out refinance on FREEandCLEAR for you to review. Based on the information you provided in your question, it is not clear to me that you have enough equity in your current home to take out the amount of proceeds you need to pay off your other loans.

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR. More about Harry

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