Refinance Payment Formula:
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Cash-out refinancing replaces your existing mortgage with a new, larger loan, allowing you to receive the difference in cash. This lets homeowners access their home equity while refinancing their mortgage at current interest rates.
The calculator uses the standard mortgage payment formula:
Where:
Explanation: The formula calculates the fixed monthly payment required to fully amortize the loan over its term.
Details: The result shows your new monthly payment after refinancing, which includes both your existing loan balance and any cash you take out. Compare this with your current payment to evaluate if refinancing makes financial sense.
Tips: Enter your current loan balance, desired cash-out amount, new interest rate, and new loan term. All values must be positive numbers. The calculator assumes a fixed-rate mortgage.
Q1: When does cash-out refinancing make sense?
A: When interest rates are lower than your current rate, you need funds for home improvements, debt consolidation, or other major expenses, and you have sufficient equity.
Q2: What are typical closing costs?
A: Expect 2-5% of the loan amount in closing costs, which may include appraisal fees, origination fees, and title insurance.
Q3: How much cash can I take out?
A: Typically up to 80% of your home's value minus your current mortgage balance, though this varies by lender.
Q4: Does this reset my loan term?
A: Yes, you're starting a new loan with a new term, which may extend your total repayment period.
Q5: Are there tax implications?
A: Interest may be tax-deductible if funds are used for home improvements (consult a tax professional).