1. What is the EMI Calculation?

The EMI (Equated Monthly Installment) calculation determines the fixed payment amount a borrower makes each month to repay a loan. The Bankrate methodology uses standard amortization formulas to calculate payments for refinanced loans.

2. How Does the Calculator Work?

The calculator uses the EMI formula:

Where:

• \( P \) — Principal loan amount ($)
• \( R \) — Monthly interest rate (annual rate ÷ 12, as decimal)
• \( N \) — Loan tenure in months

Explanation: The formula accounts for both principal and interest components of the loan payment, with interest being front-loaded in the repayment schedule.

3. Importance of EMI Calculation

Details: Accurate EMI calculation is crucial for financial planning when refinancing, helping borrowers understand their monthly obligations and compare different loan options.

4. Using the Calculator

Tips: Enter the principal amount in dollars, annual interest rate as a percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is rate-and-term refinancing?
A: It's when you refinance to change your interest rate, loan term, or both, without taking cash out.

Q2: How does refinancing affect total interest paid?
A: A lower rate reduces total interest, while extending the term may increase total interest despite lower payments.

Q3: What's the break-even point for refinancing?
A: It's when savings from lower payments equal refinancing costs, typically calculated in months.

Q4: Does this calculator include taxes and insurance?
A: No, it calculates principal and interest only. Actual mortgage payments may include escrow items.

Q5: How accurate is this calculator?
A: It provides standard EMI calculations; actual lender offers may vary based on credit and other factors.