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Refinance With Cash Out Formula:
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The Refinance With Cash Out Formula calculates the new monthly payment when refinancing an existing loan while taking additional cash out. This is common in mortgage refinancing when homeowners want to access their home equity.
The calculator uses the following formula:
Where:
Explanation: The formula calculates the monthly payment for the new loan amount (current balance plus cash out) over the new term at the new interest rate.
Details: Calculating the new payment helps borrowers understand if refinancing makes financial sense by comparing the new payment to their current payment and considering any closing costs.
Tips: Enter the monthly interest rate as a decimal (e.g., 0.004167 for 5% APR), current loan balance, cash out amount, and new loan term in months. All values must be positive numbers.
Q1: How do I convert APR to monthly rate?
A: Divide the APR by 12 (for months) and then by 100 to convert to decimal. For example, 5% APR = 0.05/12 = 0.004167 monthly rate.
Q2: Does this include closing costs?
A: No, this calculator only computes the principal and interest payment. Closing costs would be additional and typically paid separately or rolled into the loan.
Q3: What's a good rule for refinancing?
A: Generally, refinancing makes sense if you can lower your rate by at least 0.5-1% or change the loan term advantageously.
Q4: How does cash out affect my payment?
A: Taking cash out increases your loan amount, which typically increases your monthly payment unless you're also significantly lowering your interest rate.
Q5: Should I consider taxes and insurance?
A: This calculator shows only principal and interest. Your actual payment may include property taxes and insurance if escrowed.