Bankrate Mortgage Rates Refinance Calculator With Amortization

Mortgage Refinance Formula:

\[ \text{Interest (month m)} = \text{Outstanding Balance} \times R \] \[ \text{Principal (month m)} = \text{EMI} - \text{Interest (month m)} \]

Loan Amount:

Interest Rate:

Loan Term:

years

Current Balance:

Months Already Paid:

months

Monthly Payment (EMI):

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1. What is a Mortgage Refinance Calculator?

The Bankrate Mortgage Rates Refinance Calculator helps you understand how refinancing your mortgage could affect your payments and overall loan costs. It generates a detailed amortization schedule showing how each payment is split between principal and interest.

2. How Does the Calculator Work?

The calculator uses standard mortgage formulas:

\[ \text{Monthly Payment (EMI)} = P \times \frac{r(1+r)^n}{(1+r)^n-1} \] \[ \text{Interest Payment} = \text{Outstanding Balance} \times r \] \[ \text{Principal Payment} = \text{EMI} - \text{Interest Payment} \]

Where:

\( P \) — Loan amount
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Total number of payments (loan term in years × 12)

Explanation: The amortization schedule shows how each payment reduces your loan balance over time, with more going toward interest early in the loan term.

3. Importance of Amortization Schedule

Details: Understanding your amortization schedule helps you see the true cost of your loan, plan for refinancing, and make informed decisions about extra payments.

4. Using the Calculator

Tips: Enter your current loan details and proposed refinance terms. The calculator will show your new monthly payment and how it compares to your current payment.

5. Frequently Asked Questions (FAQ)

Q1: When should I consider refinancing?
A: Consider refinancing when interest rates drop significantly (usually 0.5-1% lower than your current rate) or when you want to change your loan term.

Q2: How does refinancing affect total interest paid?
A: Refinancing to a lower rate reduces total interest, but extending the loan term may increase it despite the lower rate.

Q3: What costs are involved in refinancing?
A: Refinancing typically costs 2-5% of the loan amount in closing costs (appraisal, title insurance, origination fees, etc.).

Q4: How can I pay off my mortgage faster?
A: Making extra principal payments or refinancing to a shorter term can help pay off your mortgage faster and save on interest.

Q5: What's the break-even point for refinancing?
A: The break-even point is when your monthly savings equal the refinancing costs (typically 2-3 years).