Cash Out Refinance Payment Calculator

Cash Out Refinance Payment Formula:

\[ P = r \times (PV + \text{Cash Out}) / (1 - (1 + r)^{-n}) \]

Present Value (PV):

Cash Out Amount:

Annual Interest Rate:

Loan Term:

years

Monthly Payment:

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1. What is Cash Out Refinance Payment?

A cash-out refinance replaces your existing mortgage with a new loan for more than you owe on your house. The difference goes to you in cash. This calculator helps determine your new monthly payment after refinancing with cash out.

2. How Does the Calculator Work?

The calculator uses the following formula:

\[ P = r \times (PV + \text{Cash Out}) / (1 - (1 + r)^{-n}) \]

Where:

\( P \) — Monthly payment
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( PV \) — Present value of current loan
\( \text{Cash Out} \) — Additional cash amount
\( n \) — Total number of payments (term in years × 12)

Explanation: The formula calculates the fixed monthly payment required to fully amortize the new loan amount (current balance plus cash out) over the specified term.

3. Importance of Refinance Calculation

Details: Understanding your new payment helps determine if cash-out refinancing makes financial sense. It allows comparison between keeping your current mortgage versus refinancing to access equity.

4. Using the Calculator

Tips: Enter your current loan balance, desired cash out amount, new interest rate, and loan term. All values must be positive numbers with rate greater than 0.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between rate-and-term and cash-out refinance?
A: Rate-and-term refinances only change loan terms, while cash-out refinances provide additional funds from home equity.

Q2: How does cash-out refinancing affect my payment?
A: Your payment will change based on the new loan amount (current balance + cash out), interest rate, and loan term.

Q3: What are typical closing costs for cash-out refinance?
A: Closing costs typically range from 2% to 5% of the loan amount and may be rolled into the new loan.

Q4: Are there tax implications for cash-out refinancing?
A: Interest may be tax deductible if funds are used for home improvements (consult a tax professional).

Q5: When does cash-out refinancing make sense?
A: When you need funds for home improvements, debt consolidation, or other major expenses and can secure a better rate.