- Cash-out refinance
- Replacing a mortgage with a larger new one and using the difference for other purposes, here to pay off other debts. The new loan amount in this calculator is the current mortgage balance plus the debt being consolidated. Lenders cap how much equity can be taken out, and closing costs apply but are not included here.
- Debt consolidation
- Combining several debts into one loan with a single payment. Rolling credit cards and car loans into a mortgage usually lowers the monthly payment because the rate is lower and the term is much longer. The trade-off is that short-term debt is repaid over decades, which can raise total interest, and it becomes secured by your home.
- Monthly savings
- Your current mortgage payment plus current payments on the other debts, minus the new mortgage payment. It measures cash-flow relief, not total cost. A large monthly saving can coexist with more interest over the life of the loan, so it is worth reading alongside the total interest on the new loan.
- Principal and interest
- The part of a mortgage payment that repays the loan and pays interest, excluding property taxes, homeowners insurance and mortgage insurance. Both the current and new mortgage payments in this calculator are principal and interest only. Escrow costs would generally stay similar after refinancing, so leaving them out keeps the comparison even.
- Total interest on new loan
- All the interest paid over the full term of the new consolidated mortgage if it runs to maturity: total payments minus the new loan amount. Because it includes interest on both the old mortgage balance and the consolidated debts over a long term, it is often larger than the interest those debts would have cost on their own schedules.
- Secured debt
- A loan backed by collateral that the lender can claim if payments stop, such as a mortgage secured by a home. Credit cards are unsecured. Consolidating them into a mortgage converts unsecured debt into debt tied to your house, so falling behind can put the home at risk rather than only affecting credit.
- Closing costs
- Fees paid to complete a refinance, such as origination, appraisal, title and recording charges. This calculator does not include them. They are either paid in cash or added to the new loan; if added, the balance and payment rise. Dividing closing costs by the monthly savings gives a rough number of months to recover them.
- Loan term
- The number of years over which the new consolidated mortgage is repaid. A longer term lowers the monthly payment but raises total interest. Choosing a shorter term than your remaining mortgage, or paying extra each month, can keep much of the rate benefit while limiting how long the consolidated debt is carried.
- Loan-to-value ratio (LTV)
- The new loan amount divided by the home’s appraised value, as a percent. Adding other debts to the mortgage raises it. Lenders set a maximum LTV for cash-out refinances, which limits how much debt can be consolidated, and a higher LTV can bring a higher rate or mortgage insurance.
