1. What is House Refinancing?

House refinancing involves replacing your existing mortgage with a new loan, typically to secure a lower interest rate, change the loan term, or access home equity. The refinance payment formula calculates your new monthly payment based on current rates.

2. How Does the Calculator Work?

The calculator uses the standard mortgage payment formula:

Where:

• \( PMT \) — Monthly payment
• \( P \) — Principal loan amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (loan term in years × 12)

Explanation: The formula accounts for both principal repayment and interest charges over the life of the loan.

3. Importance of Refinance Calculation

Details: Calculating your potential new payment helps determine if refinancing makes financial sense by comparing savings versus closing costs.

4. Using the Calculator

Tips: Enter the new loan amount, current interest rate, and desired loan term. For accurate results, use today's market rates and consider all refinancing costs.

5. Frequently Asked Questions (FAQ)

Q1: When does refinancing make sense?
A: Typically when you can reduce your rate by 0.5-1% or more, or when you need to change your loan term.

Q2: What costs are involved in refinancing?
A: Expect 2-5% of loan amount in closing costs (appraisal, title insurance, origination fees, etc.).

Q3: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest. Longer terms lower payments but increase total interest.

Q4: Should I include taxes/insurance?
A: This calculator shows principal+interest only. Actual payments may include escrow for taxes and insurance.

Q5: How accurate is this calculator?
A: It provides standard payment estimates. For exact figures, consult with your lender including all fees.