Mortgage Loan Comparison Calculator
Use our mortgage comparison calculator to evaluate the pros and cons of two loans. You’ll see how the term of the loan, interest rate, and how long you plan to stay in your home affect your overall mortgage cost, both on a monthly payment basis and for the total costs in life of the loans.
How the mortgage comparison calculator works
To use the mortgage comparison calculator, you will need to provide some information about the loans you’re evaluating. The calculator will show the comparative costs for your monthly payment and the total remaining balance for each loan.
Have the following details handy:
- The loan amount value
- The number of years you plan to stay in the home
- The loan term (in years)
- The interest rate for each of the loans you’re comparing
The calculator will use assumptions for your property tax and homeowners insurance. If you know these figures, enter them for a more accurate loan analysis.
Why calculating a loan comparison is important
Your home is one of your most valuable assets and one of the most important decisions you will make in your financial life. Buying a home means taking on significant financial responsibility that are accountable for. Even first-time borrowers will likely have multiple options when it comes to their mortgage — 15- versus 30-year terms, lower vs. higher interest rate, options to buy points, fixed-rate versus adjustable-rate loans, different lenders, different fees, etc. Government-backed loan programs, such as FHA, VA or USDA provide additional choice, particularly for borrowers with other financial needs or opportunities.
As with many things, it pays to shop around and do your research when you’re getting a mortgage. The choices you make today may save you — or cost you — a lot of money over the term of the loan.
How to find the best loan for your needs
Making a mortgage loan comparison is essential when it comes to how long you plan to stay in your home. If you expect to sell a home within a few years, you may want to choose a loan that offers lower upfront fees and lower short-term costs. On the other hand, if you plan to stay in the home for the long term, you may be interested in a mortgage that costs less overall, even if the short-term costs are a bit higher.
Our mortgage comparison calculator can help you understand the relationship between interest rate, loan term, and how long you plan to stay in the home. By thinking about your unique financial needs and long-term financial goals and doing the math upfront, you’ll be better prepared to evaluate lender loan options and make the right choice.
Frequently asked questions for mortgage rates comparison
How do I know which loan is better?
When comparing mortgages, the “better” option is the one that best aligns with your financial situation and goals. Consider how much money you have available for a down payment, how much you can pay in closing costs, and what you can budget for a monthly payment.
Consider also how long you plan to stay in the home. If you’re planning to move within a few years, it may make better sense for you to have a mortgage with lower upfront costs.
Our mortgage comparison calculator can help you evaluate your loan options. Even if the loans you’re comparing have the same monthly payment, the amortization schedule or fees within the payment should be further analyzed such as taxes, insurance or other potential hidden fees and loan costs.
How much difference does 0.5% interest rate make on a mortgage?
A difference of even a few tenths of a percentage can make a sizeable difference for how much a loan ultimately will cost you over the term of the loan.
A $250,000 mortgage financed with a 30-year fixed-rate loan at a 3.5% interest rate will have a monthly payment (principal and interest only) of $1,123. Over the life of the mortgage, you’ll pay $154,280 in interest. Check current rates for fixed-rate loans today.
The same mortgage with a 3.0% interest rate will have a monthly payment of $1,054. Over the life of the mortgage, you’ll pay $129,440 in interest.
That’s a difference of $24,840 in total interest payments.
Of course, the interest rate is only part of the picture when you compare loans. You’ll also need to consider closing costs, your down payment, and the cost of private mortgage insurance (PMI) to name a few.
What’s the difference between a 15- and a 30-year mortgage?
With all things equal, you’ll likely have a lower interest rate for a 15-year mortgage. Combined with a two times less loan term, you’ll pay substantially less interest over the life of the loan.
However, the monthly loan payments are considerably lower for a 30-year mortgage simply because the full loan amount is spread out over a two times longer loan term. For most homeowners, a 30-year payment is much more affordable for a monthly budget.
15- and 30-year terms are among the options you need to consider when shopping for a mortgage.
How do I know if it makes sense to refinance?
A rule of thumb states that it makes sense to refinance an existing mortgage if interest rates have dropped by at least 0.75% since you financed the current loan.
You might also consider refinancing if your credit score has significantly improved or you’re approaching the end of the initial term of an adjustable-rate mortgage (ARM), like a 5/1 or 7/1 ARM.
For more tips on a refinance, checkout our advice on when it’s a good time to refinance.
This information is provided for general informational purposes. All transactions are subject to credit approval. Contact a loan officer for a custom quote.