Mortgage Refinance Calculator with Cash Out
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Mortgage Refinance Calculator with Cash Out
Understanding Mortgage Refinancing with Cash Out
Refinancing your mortgage allows you to replace your existing home loan with a new one, potentially on different terms. A "cash-out refinance" is a specific type of refinance where you borrow more than your current outstanding mortgage balance and receive the difference in cash. This cash can be used for various purposes, such as home improvements, debt consolidation, education expenses, or investments.
The decision to refinance with a cash-out involves weighing the benefits against the costs. Key factors include securing a lower interest rate, shortening your loan term, and accessing funds. However, you'll also incur closing costs and will be taking on a larger mortgage debt.
How This Calculator Works:
This calculator helps you estimate the potential financial impact of a cash-out refinance. It compares your current mortgage's monthly payment and total interest paid with the projected monthly payment and total interest of the new, refinanced mortgage, including the cash-out amount and associated closing costs.
- Current Mortgage Details: Input your existing loan's remaining balance, interest rate, and the remaining term (or the full original term if you prefer to compare total interest over a full term).
- New Mortgage Details: Enter the total amount of the new loan (which includes your current balance plus the cash-out amount), the proposed new interest rate, the new loan term in years, and the specific amount of cash you wish to receive.
- Closing Costs: Estimate the percentage of the new loan amount that will be charged as closing costs.
The Math Behind the Calculation:
The calculator uses the standard formula for calculating a fixed-rate mortgage payment (M):
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Monthly PaymentP = Principal Loan Amounti = Monthly Interest Rate (Annual Rate / 12)n = Total Number of Payments (Loan Term in Years * 12)
For the Current Mortgage, P is the currentLoanBalance.
For the New Mortgage, the principal amount P is calculated as: newLoanAmount + (newLoanAmount * closingCosts / 100). This accounts for the total amount borrowed, including the cash out and the closing costs rolled into the loan.
The calculator then determines the total interest paid over the life of each loan by subtracting the principal from the total amount paid (Monthly Payment * Total Number of Payments).
Key Considerations for Cash-Out Refinancing:
- Closing Costs: Refinancing involves fees (appraisal, title insurance, origination fees, etc.). These can often be rolled into the new loan amount, increasing your total debt.
- Loan Term Extension: If you extend your loan term (e.g., from a 15-year to a 30-year mortgage), your monthly payments may decrease, but you'll pay significantly more interest over time.
- Interest Rate: Cash-out refinance rates are often slightly higher than "rate-and-term" refinance rates. Compare carefully.
- Equity: Taking cash out reduces your home equity. Ensure you still have adequate equity remaining.
- Purpose of Funds: Consider if the use of the cash-out funds justifies the cost of refinancing and the increased debt.
Disclaimer: This calculator provides an estimate for informational purposes only and does not constitute financial advice. Actual loan terms, rates, and closing costs may vary. Consult with a qualified mortgage lender for personalized advice.
function calculateMonthlyPayment(principal, annualRate, termYears) {
var monthlyRate = annualRate / 100 / 12;
var numberOfPayments = termYears * 12;
var monthlyPayment = 0;
if (monthlyRate > 0) {
monthlyPayment = principal * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else {
monthlyPayment = principal / numberOfPayments; // Interest-free loan
}
return monthlyPayment;
}
function calculateTotalInterest(monthlyPayment, principal, numberOfPayments) {
var totalPaid = monthlyPayment * numberOfPayments;
var totalInterest = totalPaid – principal;
return totalInterest < 0 ? 0 : totalInterest;
}
function formatCurrency(amount) {
return "$" + amount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}
function calculateRefinance() {
var currentLoanBalance = parseFloat(document.getElementById("currentLoanBalance").value);
var currentInterestRate = parseFloat(document.getElementById("currentInterestRate").value);
var newLoanAmount = parseFloat(document.getElementById("newLoanAmount").value);
var newInterestRate = parseFloat(document.getElementById("newInterestRate").value);
var loanTerm = parseInt(document.getElementById("loanTerm").value);
var cashOutAmount = parseFloat(document.getElementById("cashOutAmount").value);
var closingCostsPercent = parseFloat(document.getElementById("closingCosts").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
resultDiv.style.display = 'none';
if (isNaN(currentLoanBalance) || isNaN(currentInterestRate) || isNaN(newLoanAmount) || isNaN(newInterestRate) || isNaN(loanTerm) || isNaN(cashOutAmount) || isNaN(closingCostsPercent)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
resultDiv.style.display = 'block';
return;
}
if (currentLoanBalance <= 0 || newLoanAmount <= 0 || loanTerm <= 0 || newInterestRate < 0 || currentInterestRate < 0 || closingCostsPercent < 0) {
resultDiv.innerHTML = "Please enter positive values for loan amounts and term, and non-negative rates/percentages.";
resultDiv.style.display = 'block';
return;
}
// — Current Mortgage Calculations —
// For current, we can estimate remaining payments or calculate based on full term for comparison
// Let's assume comparison is based on the NEW loan term for simplicity, or remaining term if available.
// For this example, we'll use the new loan term for a like-for-like comparison.
var currentNumberOfPayments = loanTerm * 12; // Using new loan term for comparison basis
var currentMonthlyPayment = calculateMonthlyPayment(currentLoanBalance, currentInterestRate, loanTerm); // Assuming remaining term matches new term
var currentTotalInterest = calculateTotalInterest(currentMonthlyPayment, currentLoanBalance, currentNumberOfPayments);
var currentTotalPaid = currentLoanBalance + currentTotalInterest;
// — New Mortgage Calculations —
var closingCostsAmount = newLoanAmount * (closingCostsPercent / 100);
var principalForNewLoan = newLoanAmount; // The new loan amount already includes cash out and potentially closing costs if factored into it.
// If closing costs are to be added ON TOP of newLoanAmount, uncomment below.
// var principalForNewLoan = newLoanAmount + closingCostsAmount;
var newMonthlyPayment = calculateMonthlyPayment(principalForNewLoan, newInterestRate, loanTerm);
var newTotalInterest = calculateTotalInterest(newMonthlyPayment, principalForNewLoan, currentNumberOfPayments); // Use same number of payments for fair comparison
var newTotalPaid = principalForNewLoan + newTotalInterest;
// — Savings Calculation —
var monthlyPaymentDifference = currentMonthlyPayment – newMonthlyPayment;
var totalInterestDifference = currentTotalInterest – newTotalInterest;
var totalPaidDifference = currentTotalPaid – newTotalPaid;
var outputHTML = '
Estimated Refinance Impact
';
outputHTML += '
Cash Out Received: ' + formatCurrency(cashOutAmount) + ";
outputHTML += '
Estimated Closing Costs: ' + formatCurrency(closingCostsAmount) + ";
outputHTML += '
New Loan Principal (incl. cash out & estimated closing costs): ' + formatCurrency(principalForNewLoan) + ";
outputHTML += '
';
outputHTML += '
Current Estimated Monthly Payment: ' + formatCurrency(currentMonthlyPayment) + ";
outputHTML += '
New Estimated Monthly Payment: ' + formatCurrency(newMonthlyPayment) + ";
outputHTML += '= 0 ? '#28a745' : '#dc3545') + ';">
Estimated Monthly Savings/Increase: ' + formatCurrency(monthlyPaymentDifference) + ";
outputHTML += '
';
outputHTML += '
Current Estimated Total Interest Paid (over ' + loanTerm + ' yrs): ' + formatCurrency(currentTotalInterest) + ";
outputHTML += '
New Estimated Total Interest Paid (over ' + loanTerm + ' yrs): ' + formatCurrency(newTotalInterest) + ";
outputHTML += '= 0 ? '#28a745' : '#dc3545') + ';">
Estimated Total Interest Savings/Increase: ' + formatCurrency(totalInterestDifference) + ";
if (totalPaidDifference > 0) {
outputHTML += '
Potential Total Savings Over ' + loanTerm + ' Years: ' + formatCurrency(totalPaidDifference) + ";
} else {
outputHTML += '
Potential Total Additional Cost Over ' + loanTerm + ' Years: ' + formatCurrency(Math.abs(totalPaidDifference)) + ";
}
resultDiv.innerHTML = outputHTML;
resultDiv.style.display = 'block';
}