Mortgage Loan Calculator Comparison

Monthly Payment Formulas:

\[ M1 = P \times \frac{r1 \times (1 + r1)^n}{(1 + r1)^n - 1} \] \[ M2 = P \times \frac{r2 \times (1 + r2)^n}{(1 + r2)^n - 1} \]

Loan Principal:

USD

First Loan Rate (Annual):

Second Loan Rate (Annual):

Loan Term:

years

First Loan Payment:

Second Loan Payment:

Monthly Difference:

Total Savings:

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1. What is a Mortgage Loan Comparison Calculator?

Definition: This calculator compares monthly payments between two different mortgage loan options with varying interest rates.

Purpose: It helps homebuyers and refinancers evaluate different loan options to make informed financial decisions.

2. How Does the Calculator Work?

The calculator uses the standard mortgage payment formula for each loan:

\[ M = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Where:

\( M \) — Monthly payment (USD)
\( P \) — Loan principal (USD)
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Total 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 Loan Comparison

Details: Comparing loans helps identify potential savings from lower interest rates and shows the long-term financial impact of rate differences.

4. Using the Calculator

Tips: Enter the loan amount, two different annual interest rates, and loan term. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why compare mortgage rates?
A: Even small rate differences can save thousands over the loan term.

Q2: What's included in the monthly payment?
A: This calculates principal and interest only (P&I). Taxes and insurance would be additional.

Q3: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest paid.

Q4: Should I always choose the lowest rate?
A: Consider closing costs and other loan terms too - sometimes a slightly higher rate with lower fees may be better.

Q5: How accurate is this calculator?
A: It provides precise P&I calculations but doesn't account for variable rates, PMI, or escrow.