1. What is a Mortgage Refinance Loan Calculator?

Definition: This calculator estimates the monthly payment for a mortgage refinance loan based on the principal amount, interest rate, and loan term.

Purpose: It helps homeowners evaluate refinancing options by showing potential monthly savings or costs.

2. How Does the Calculator Work?

The calculator uses the standard mortgage formula:

Where:

• \( M \) — Monthly payment (USD)
• \( P \) — Loan principal (USD)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Number of payments (months)

Explanation: The formula accounts for both principal and interest payments over the life of the loan.

3. Importance of Refinance Calculation

Details: Accurate payment calculations help determine if refinancing will save money, considering closing costs and new loan terms.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate (as percentage), and loan term in years. All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: What costs aren't included in this calculation?
A: This doesn't include property taxes, homeowners insurance, PMI, or closing costs which may be part of your actual payment.

Q2: How is the monthly interest rate calculated?
A: The annual rate is divided by 12 (months) and converted from percentage to decimal (e.g., 5% becomes 0.004167 monthly).

Q3: Why does a lower rate sometimes increase payments?
A: If you're extending the loan term (e.g., from 15 to 30 years), monthly payments may decrease even if the rate is higher.

Q4: How accurate is this calculator?
A: It provides the principal+interest payment accurately, but consult lenders for exact quotes including all fees.

Q5: Should I refinance if the payment is lower?
A: Consider break-even point (how long to recover closing costs) and total interest over the loan life, not just monthly payment.