House Refinance Calculator

Refinance Payment Formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Monthly Payment (PMT):

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1. What is the House Refinance Calculator?

The House Refinance Calculator helps you determine your new monthly mortgage payment when refinancing your home loan. It uses the standard PMT formula to calculate your payment based on the new loan amount, interest rate, and term.

2. How Does the Calculator Work?

The calculator uses the PMT formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

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 and interest payments over the life of the loan.

3. Importance of Refinance Calculation

Details: Calculating your potential refinance payment helps you determine if refinancing makes financial sense by comparing your current payment to the new payment and considering closing costs.

4. Using the Calculator

Tips: Enter the new loan amount, annual interest rate, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What costs are not included in this calculation?
A: This calculates principal and interest only. It doesn't include property taxes, homeowners insurance, or PMI.

Q2: How does refinancing save money?
A: You can save by getting a lower interest rate, shortening your loan term, or both.

Q3: What is break-even point in refinancing?
A: The point when your monthly savings equal the closing costs of refinancing.

Q4: Should I refinance to a shorter term?
A: A shorter term usually has higher payments but saves interest over the life of the loan.

Q5: How does cash-out refinance work?
A: You borrow more than your current balance and receive the difference in cash, increasing your loan amount.