Cash Out Refinance Payment Calculator

Payment Formula:

\[ PMT = (Current\ Balance + Cash\ Out) \times \frac{r}{[1 - (1 + r)^{-n}]} \]

Current Balance (USD):

Cash Out (USD):

Interest Rate:

decimal

Number of Periods:

periods

New Payment (PMT):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Cash Out Refinance Payment?

The cash out refinance payment is the new monthly payment amount after refinancing your existing mortgage and taking out additional cash. This calculation helps determine if the refinance makes financial sense for your situation.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

\[ PMT = (Current\ Balance + Cash\ Out) \times \frac{r}{[1 - (1 + r)^{-n}]} \]

Where:

\( PMT \) — New monthly payment amount
\( Current\ Balance \) — Remaining balance on existing loan
\( Cash\ Out \) — Additional amount being borrowed
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Number of remaining payments (term in months)

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

3. Importance of Payment Calculation

Details: Calculating the new payment helps borrowers understand the financial impact of a cash-out refinance, including whether they can afford the new payment and if the refinance meets their financial goals.

4. Using the Calculator

Tips: Enter current loan balance, cash out amount, interest rate (in decimal form), and number of payment periods. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between rate and APR?
A: The interest rate is the cost of borrowing, while APR includes fees and other loan costs to show the true cost of the loan.

Q2: Should I include closing costs in the cash out amount?
A: If you're rolling closing costs into the loan, yes. Otherwise, calculate them separately as they affect your total loan amount.

Q3: How does cash out refinancing affect my equity?
A: It reduces your home equity because you're borrowing more against your property's value.

Q4: What's a good interest rate for cash out refinancing?
A: This depends on market conditions, but typically you want a rate at least 0.5% lower than your current rate to make refinancing worthwhile.

Q5: How does this differ from a home equity loan?
A: Cash-out refinancing replaces your existing mortgage, while a home equity loan is a second mortgage with separate payments.