1. What is a Refinance Paid Off House Calculator?

Definition: This calculator determines the monthly payment for a cash-out refinance on a paid-off house using standard mortgage formulas.

Purpose: It helps homeowners estimate their new mortgage payments when refinancing a fully paid property to access equity.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( M \) — Monthly payment (USD)
• \( P \) — Loan principal from cash-out (USD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Number of payments (term in years × 12)

Explanation: The formula calculates the fixed monthly payment required to fully amortize the loan over its term.

3. Importance of Refinance Calculation

Details: Accurate payment estimation helps homeowners evaluate affordability and make informed financial decisions when accessing home equity.

4. Using the Calculator

Tips: Enter the loan amount you want to cash out, the annual interest rate, and the loan term in years. All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: What is cash-out refinancing?
A: It's when you take out a new mortgage for more than you owe and receive the difference in cash from your home's equity.

Q2: Why refinance a paid-off house?
A: Homeowners may refinance to access equity for home improvements, debt consolidation, or other financial needs.

Q3: Does this include taxes and insurance?
A: No, this calculates principal and interest only. Your actual payment may include escrow for taxes and insurance.

Q4: How does the interest rate affect payments?
A: Higher rates increase monthly payments. Even small rate changes can significantly impact long-term costs.

Q5: What's the benefit of shorter loan terms?
A: Shorter terms typically have lower rates and save interest, but result in higher monthly payments.