Mortgage Comparison Calculator
Compare up to 4 mortgage offers side by side on total cost, monthly payment, and APR. Enter values for instant results with step-by-step formulas.
Formula
M = P[r(1+r)^n] / [(1+r)^n - 1]
Monthly payment M is calculated from principal P, monthly rate r = annual rate / 12, and total payments n = years x 12. Total cost includes all monthly payments plus upfront costs (points + closing costs).
Worked Examples
Example 1: 30-Year Fixed: Low Rate with Points vs Higher Rate No Points
Problem: Compare two 30-year offers on a $350,000 loan. Offer A: 6.5% rate, 0 points, $5,000 closing. Offer B: 6.0% rate, 1 point ($3,500), $6,000 closing.
Solution: Offer A: Monthly = $2,212, Total interest = $446,248, Upfront = $5,000, Total cost = $801,248\nOffer B: Monthly = $2,098, Total interest = $415,232, Upfront = $9,500, Total cost = $774,732\nMonthly savings with B = $114/mo\nUpfront cost difference = $4,500\nBreakeven = $4,500 / $114 = 39.5 months (3.3 years)\nLifetime savings with B = $26,516
Result: Offer B saves $26,516 over the life of the loan, with a breakeven at 3.3 years
Example 2: 15-Year vs 30-Year Comparison
Problem: Compare a 30-year at 6.5% vs a 15-year at 5.75% on a $350,000 loan, both with $5,000 closing costs.
Solution: 30-Year: Monthly = $2,212, Total paid = $796,248 + $5,000 = $801,248\n15-Year: Monthly = $2,908, Total paid = $523,440 + $5,000 = $528,440\nMonthly difference = $696 more for 15-year\nTotal savings with 15-year = $272,808\n5-year equity: 30-yr = ~$24,500, 15-yr = ~$115,500
Result: 15-year saves $272,808 total but costs $696 more per month
Frequently Asked Questions
How do I compare different mortgage offers effectively?
Comparing mortgage offers requires looking beyond just the interest rate to understand the true cost of each loan. The key metrics to compare are the monthly payment amount, the total interest paid over the full loan term, upfront costs including discount points and closing costs, and the effective annual percentage rate (APR) which combines the interest rate with fees. A lower rate with high points might cost more overall than a slightly higher rate with no points, especially if you plan to sell or refinance within a few years. The breakeven point, which is the number of months it takes for the lower payment to offset the higher upfront cost, is critical for deciding between offers. If you plan to stay in the home longer than the breakeven period, paying points can save significant money over the life of the loan.
What are mortgage points and when should I buy them?
Mortgage discount points are upfront fees paid to the lender at closing to reduce your interest rate. One point equals 1% of the loan amount and typically reduces the rate by 0.25%. For a $350,000 loan, one point costs $3,500 and might lower your rate from 6.5% to 6.25%, saving roughly $60 per month. The breakeven point is $3,500 divided by $60, which equals about 58 months or nearly 5 years. If you plan to stay in the home longer than 5 years, buying the point saves money. If you might move or refinance sooner, skip the points. Some lenders offer fractional points like half a point for a smaller rate reduction. In a high-rate environment, points become more attractive because the absolute dollar savings from each rate reduction are larger on bigger loan amounts.
Should I choose a 15-year or 30-year mortgage?
A 15-year mortgage typically offers a lower interest rate (usually 0.5% to 0.75% lower than a 30-year) and dramatically reduces total interest paid, but requires significantly higher monthly payments. For a $350,000 loan at 6.5% over 30 years, the monthly payment is about $2,212 with total interest of $446,248. The same loan at 5.75% over 15 years has a monthly payment of $2,908 but total interest of only $173,440, saving $272,808 in interest. The 15-year payment is $696 more per month. Choose the 15-year if you can comfortably afford the higher payment without sacrificing emergency savings or retirement contributions. Choose the 30-year if cash flow flexibility is important, and consider making extra payments when affordable. Some borrowers take the 30-year for safety but make payments as if they had a 15-year mortgage.
What closing costs should I expect with a mortgage?
Typical closing costs range from 2% to 5% of the loan amount and include several categories of fees. Lender fees include the origination fee (0.5% to 1% of loan), application fee ($300 to $500), underwriting fee ($400 to $900), and credit report fee ($25 to $50). Third-party fees include the appraisal ($300 to $600), title search and insurance ($1,000 to $3,000), survey ($300 to $500), and attorney fees ($500 to $2,000). Government fees include recording fees ($25 to $250) and transfer taxes which vary by state. Prepaid items include homeowner insurance premium, property taxes for the initial escrow, and prepaid daily interest charges from closing to month end. Some closing costs are negotiable, and you can ask the seller to cover a portion as part of your purchase agreement. Always request a Loan Estimate from each lender to compare closing costs line by line.
How does refinancing factor into mortgage comparison decisions?
When comparing mortgage offers, consider the likelihood that you might refinance in the future, as this affects which offer truly saves you the most money. If interest rates are historically high, choosing a no-points adjustable or higher-rate fixed mortgage might be smarter because you plan to refinance when rates drop. The average homeowner refinances every 4 to 7 years, so paying large upfront costs for a minimal rate reduction often does not break even. Calculate the breakeven period for each option: divide the total upfront cost difference by the monthly payment savings. If your breakeven period exceeds 5 years, the cheaper-upfront option is usually better unless you are certain about staying long term. Also consider that refinancing itself costs $3,000 to $6,000 in closing costs, so factor those future costs into your overall comparison. Some lenders offer no-closing-cost refinancing by rolling costs into a slightly higher rate.
What credit score do I need for the best mortgage rates?
A FICO score of 760 or higher typically qualifies you for the lowest advertised mortgage rates. Dropping from 760 to 700 can cost you 0.25-0.50% more in interest — on a $400,000 30-year loan, that difference costs roughly $60-$120 more per month and over $25,000 in extra interest. Scores between 620-699 still qualify for conventional loans but at noticeably higher rates. Scores below 580 generally require FHA loans, which accept down payments as low as 3.5% but mandate mortgage insurance for the life of the loan. Before applying, pay down revolving balances to below 30% of credit limits — this alone can boost your score 20-40 points.