Mortgage Rate Calculator Comparison

Mortgage 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 Interest Rate:

Second Interest Rate:

Loan Term:

years

First Rate Monthly Payment:

Second Rate Monthly Payment:

Monthly Difference:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is a Mortgage Rate Comparison Calculator?

Definition: This calculator compares monthly mortgage payments for two different interest rates, helping borrowers evaluate loan options.

Purpose: It helps homebuyers and refinancers understand how interest rate changes affect their monthly payments.

2. How Does the Calculator Work?

The calculator uses the standard mortgage formula for each rate:

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

Where:

$ M $ — Monthly payment (USD)
$ P $ — Loan principal (USD)
$ r $ — Monthly interest rate (annual rate ÷ 12)
$ n $ — Number of payments (loan term in years × 12)

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

3. Importance of Rate Comparison

Details: Even small rate differences can significantly impact monthly payments and total interest paid over the loan term.

4. Using the Calculator

Tips: Enter the loan amount, two interest rates to compare, and loan term. The calculator shows monthly payments and the difference between them.

5. Frequently Asked Questions (FAQ)

Q1: How much difference does 0.5% make?
A: On a $300,000 loan over 30 years, 0.5% difference equals about $90/month or $32,400 over the loan term.

Q2: Should I always choose the lower rate?
A: Consider other factors like points, fees, and whether the rate is fixed or adjustable.

Q3: Does this include taxes and insurance?
A: No, this calculates only principal and interest. Add 1/12 of annual property taxes and insurance for PITI.

Q4: How accurate is this calculator?
A: It provides precise calculations for fixed-rate loans. ARMs would require more complex calculations.

Q5: Can I compare more than two rates?
A: Run multiple comparisons by changing one rate at a time to see different scenarios.