1. What is a Cash Out Refinance?

A cash-out refinance replaces your existing mortgage with a new, larger loan, allowing you to receive the difference between the two loans in cash. This lets homeowners access their home equity while often securing a lower interest rate.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

Where:

• \( P \) — Monthly payment
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (loan term in months)
• Balance — Current mortgage balance
• Cash Out — Additional amount borrowed

Explanation: The formula calculates the fixed monthly payment required to fully amortize the loan over its term.

3. Importance of Refinance Calculation

Details: Understanding your new loan amount and monthly payment helps determine if refinancing makes financial sense and fits your budget.

4. Using the Calculator

Tips: Enter your current mortgage balance, desired cash out amount, new interest rate (as a percentage), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: When does a cash-out refinance make sense?
A: When you need funds for home improvements, debt consolidation, or other major expenses, and can secure a lower interest rate.

Q2: What are typical closing costs?
A: Usually 2-5% of the loan amount, including appraisal, title insurance, and origination fees.

Q3: How does this affect my home equity?
A: Your equity decreases by the cash-out amount plus any closing costs rolled into the loan.

Q4: What's the difference between cash-out and rate-and-term refinance?
A: Rate-and-term only changes the interest rate and/or term without taking additional cash out.

Q5: Are there tax implications?
A: Interest may be tax deductible if funds are used for home improvements (consult a tax professional).