Advanced Mortgage Refinancing Calculator: Compare Existing and New Loan
To receive a more profound understanding as to whether or not you should refinance, enter the information about your existing loan and new loan. Our advanced refi calculator will tell you if this new loan can lower your monthly payments and help you save on interest and fees.
Advanced Refinance Calculator Instructions
Step 1: Enter Your Original Loan Starting Date
You may be able to find this information on your loan servicer’s website. You can also find it in your closing documents. If you don’t know the exact month, that’s okay; you can use an estimate.
Step 2: Enter Your Existing Interest Rate (APY)
Check your closing documents to find your interest rate. You may even be able to see that information on your mortgage statement or your lender’s website.
Step 3: Enter Your Original Loan Amount
You can also find this information in your online account with your lender or loan servicer or through your closing documents. More loan servicers and lenders are including this information in statements as well.
Step 4: Enter Your Original Loan Term
You probably have a 30-year loan term (360 months), though you might have a 15-year one (180 months). You’ll find this information where you find your other loan information, either in your account online or your loan documents.
Step 5: Input Your New Loan Balance
This amount should be close to the figure that you currently owe. If you’re doing a cash-out refinance, you’ll add that in a few steps, so for now, just input the amount your new loan will be.
Step 6: Input Your Closing Costs
These can vary depending on many factors. If you’ve already explored refinance loans and have a figure from your lender, you can input that here. Typically, closing costs for a refinance are anywhere from 2% to 5% of your loan principal amount. You may want to be conservative and input 5% to be on the safe side.
Step 7: Input Your New Interest Rate
This is another number that can vary depending on many factors. If you have a number in mind or have been given a number by your refinance lender, enter that here. You can also get a general idea of what interest rates are like and enter that number.
Step 8: Enter Your New Term
Will you be financing your loan for 15 or 30 years? Those are the two most likely scenarios, but you can run the numbers both ways.
Step 9: Choose Your Cash Out Amount
Many consumers refinance their homes to take advantage of the equity by “cashing out.” For example, if you purchased your home for $300,000 and put a down payment of $60,000, your loan would be around $250,000. Now, your home might be worth $400,000. You may want to take $100,000 of that equity you have earned in cash and refinance your loan for the amount you still owe on your home plus that $100,000. If you’re not taking cash out and are just doing a straight refinance, you can leave this as $0.
Step 10: Choose Your Method of Paying Closing Costs
If you’re paying closing costs, these will be added to the loan. If you’re coming up with the cash for closing, you won’t be adding these costs onto the loan.
Step 11: Click “Calculate”
Your results will show you a comparison of the loan you have now vs. what your loan will look like if you refinance. Here, you’ll be able to see the time you have left on both loans, how much interest you’ll pay, your payment amount, your total payments, and your payoff date.
You can do this calculation for a variety of loan scenarios.
Which Lenders Have the Best Personal Loan Rates?
Finding the right lender could help you save hundreds or even thousands of dollars. The rate you receive on your personal loan depends on many factors, including your credit score and income. The smartest way to know if you’re getting the best personal loan rate is to compare offers from competing lenders.
What Is a Cash-Out Refinance?
A cash-out refinance is a financial transaction where a homeowner replaces their existing mortgage with a new one for a higher amount. The homeowner receives the difference between the old and new mortgage amounts in cash. Here’s how it works:
Home Equity
The homeowner must have sufficient home equity, the difference between the home’s current market value and the amount owed on the existing mortgage.
Increased Loan Amount
The new mortgage is larger than the old one, with the excess amount given to the homeowner as cash.
Usage
You can use the cash for various purposes, such as home improvements, debt consolidation, or other financial needs.
Repayment
The homeowner repays the entire mortgage, including the cash-out portion, over an extended period, often 15 or 30 years.
Interest Rates
Cash-out refinance rates are typically lower than personal loan rates, making it an attractive option for homeowners seeking large sums of money.
Collateral
The home serves as collateral, and failure to repay the loan could lead to foreclosure.
Cash-Out Refinance or Personal Loan: Which Is the Better Option?
A cash-out refinance and a personal loan are both methods of obtaining additional funds, but they differ in several key ways:
Type of Loan
Cash-out refinance
This is a type of home loan that replaces your existing mortgage with a new one for a higher amount than you currently owe on your home. The excess amount is given to you in cash, which you can use as you wish. It’s specifically for homeowners with sufficient home equity.
Personal loan
A personal loan is an unsecured loan not tied to any collateral, like a home or a car. It is typically based on your creditworthiness and income, and it can be used for various purposes.
Collateral
Cash-out refinance
Involves using your home as collateral. If you fail to repay the loan, your home could be at risk of foreclosure.
Personal loan
Unsecured, so it doesn’t require collateral. If you default on a personal loan, it can affect your credit score and lead to collection efforts, but your home is not at risk.
Interest Rates
Cash-out refinance
Generally, interest rates for mortgage loans are typically lower than those for unsecured personal loans. This is because the home acts as collateral, reducing the risk for the lender.
Personal loan
Interest rates for personal loans are usually higher than mortgage rates due to the unsecured nature of the loan.
Loan Amount and Terms
Cash-out refinance
You can typically access a more significant amount of funds through a cash-out refinance, limited by the available home equity and the home’s appraised value. Repayment terms are usually long, often 15 or 30 years.
Personal loan
Personal loans typically have lower borrowing limits than cash-out refinances, and repayment terms are generally shorter, often 1 to 7 years.
Tax Implications
Cash-out refinance
The interest paid on the new mortgage is potentially tax-deductible if the funds are used for home improvements. However, this may be subject to certain limitations and tax laws.
Personal loan
Interest paid on a personal loan is generally not tax-deductible.
Application Process
Cash-out refinance
Involves a more extensive and time-consuming application process, including a home appraisal, credit checks, and documentation related to the property.
Personal loan
Generally, personal loans have a faster and more straightforward application process with less paperwork.
Other Cash-Out Refinance vs. Personal Loan Considerations
- Choosing between a cash-out refinance and a personal loan depends on your specific financial situation, the purpose of the funds, and your preferences.
- If you’re a homeowner with substantial equity and need a more significant amount for home-related expenses, a cash-out refinance might be a suitable option.
- If you don’t own a home or need funds for various purposes, a personal loan could be a more practical choice.
- Be sure to compare interest rates, terms, and fees to make an informed decision.
