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. This calculator uses Bankrate's methodology for cash-out refinanced mortgages.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

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

Explanation: The formula calculates the fixed monthly payment that pays off the loan (principal + interest) over the specified term.

3. Importance of EMI Calculation

Details: Accurate EMI calculation helps borrowers understand their monthly obligations and plan their finances accordingly when refinancing a mortgage.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What is cash-out refinancing?
A: Cash-out refinancing replaces your existing mortgage with a new, larger loan, allowing you to receive the difference in cash.

Q2: How does interest rate affect EMI?
A: Higher interest rates increase your EMI payment, while lower rates decrease it, assuming the same principal and term.

Q3: What's better - longer or shorter loan term?
A: Shorter terms mean higher EMIs but less total interest paid. Longer terms reduce monthly payments but increase total interest costs.

Q4: Are there other costs besides EMI?
A: Yes, refinancing typically involves closing costs (2-5% of loan amount), which may be rolled into the new loan.

Q5: How accurate is this calculator?
A: This provides a good estimate, but actual payments may vary slightly due to rounding and specific lender policies.