What am I doing wrong? Cash out refi

[Joe M.]

Hi BP

Ive never done a cash out refi before, so not sure exactly the process or how to make it work.  I get the concepts of it.  It seems easy enough. I just got done talking to my bank and a bit surprised at what they came back at me with.  Are these numbers pretty normal?  Going into this, I wanted to pull out about 40k

Current loan

-About 55k left on 80k loan.  House is currently valued around 125k.  About 20 years left on a fixed 30 yeaer at 5%

-I could get 38k out.  New loan would be at 5.6% increasing payments by about $175 a month.  I guess I figured they would be a bit better.  

Am I wrong for hoping for something better?