Question 1

How do I compare mortgage offers?

Accepted Answer

To compare mortgage offers effectively, gather the same information for each mortgage: home price, down payment, APR, loan term, property taxes, insurance, HOA fees, closing costs, and any extra payment plans. Enter this information into the calculator and select your comparison metric (lowest monthly payment, lowest total interest, lowest total cost, or fastest payoff). The calculator will show you which mortgage is best for your selected metric and provide a side-by-side comparison table.

Question 2

What is the difference between APR and interest rate?

Accepted Answer

Interest rate is the cost of borrowing money, expressed as a percentage. APR (Annual Percentage Rate) includes the interest rate plus additional fees and costs, giving you the true cost of the loan. APR is typically higher than the interest rate because it includes origination fees, points, and other costs. When comparing mortgages, use APR to see the true cost difference between offers, as it accounts for all loan costs.

Question 3

What is the difference between 15-year and 30-year mortgages?

Accepted Answer

A 15-year mortgage has higher monthly payments but significantly less total interest. A 30-year mortgage has lower monthly payments but much more total interest. For example, a $240,000 loan at 6% costs $124,550 in interest over 15 years but $277,611 over 30 years. Choose 15 years if you can afford higher payments and want to save on interest. Choose 30 years for lower monthly payments and more flexibility.

Question 4

How much down payment is enough?

Accepted Answer

A 20% down payment is traditionally considered ideal because it avoids Private Mortgage Insurance (PMI), qualifies you for better interest rates, and reduces your loan amount. However, many buyers put down 3-10%, especially first-time buyers. A larger down payment reduces monthly payments and total interest, but requires more upfront cash. Use this calculator to see how different down payment amounts affect your monthly payment and total cost.

Question 5

Should I pay points or closing costs?

Accepted Answer

Paying points (prepaid interest) or higher closing costs can lower your interest rate, reducing monthly payments and total interest. However, you need to calculate the break-even point - how long it takes for interest savings to exceed the upfront cost. If you plan to stay in the home long enough, paying points can save money. Use this calculator to compare mortgages with and without points to see which is better for your situation.

Question 6

Do property taxes and insurance matter when comparing mortgages?

Accepted Answer

Yes! Property taxes and insurance are significant ongoing costs that increase your total monthly payment. A mortgage with a lower P&I payment but higher taxes/insurance may cost more overall. This calculator allows you to include or exclude taxes and insurance in the comparison. Including them gives you a more accurate picture of your true monthly housing cost (PITI: Principal, Interest, Taxes, Insurance).

Question 7

Is making extra payments worth it?

Accepted Answer

Yes! Extra payments reduce your principal balance, which reduces future interest calculations. Even small extra payments ($50-200/month) can save thousands in interest and shave years off your loan. For example, adding $200/month to a $240,000 mortgage at 6.5% saves over $68,000 in interest and reduces the loan term by 7 years. Extra payments are most effective early in the loan when interest is highest.

Question 8

Should I refinance or get a new mortgage?

Accepted Answer

Refinancing can be beneficial if you can get a lower APR, shorter term, or both. However, refinancing has costs (closing fees, etc.) that must be considered. Use this calculator to compare your current mortgage with potential refinance offers. Calculate the break-even point - how long it takes for savings to exceed refinancing costs. If you plan to stay in the home long enough, refinancing can save money.

Question 9

How accurate is this mortgage comparison calculator?

Accepted Answer

This comparison is accurate for standard fixed-rate mortgages with fixed monthly payments. It assumes: payments are made on time, interest compounds monthly, no prepayment penalties (unless specified), and standard amortization. Actual results may vary due to: variable rates, payment timing, lender-specific terms, PMI (if down payment < 20%), or fees not included. Always verify with lenders for exact amounts and terms.

Question 10

What should I include in closing costs?

Accepted Answer

Closing costs typically include: origination fees, appraisal fees, title insurance, recording fees, prepaid property taxes and insurance, and other lender fees. Closing costs typically range from 2-5% of the loan amount. Include all upfront costs in the closing costs field to get an accurate total cost comparison. Some lenders offer "no-closing-cost" mortgages, but they often charge a higher interest rate.

Question 11

How do HOA fees affect mortgage comparison?

Accepted Answer

HOA (Homeowners Association) fees are monthly fees that don't reduce your loan balance but increase your total monthly payment. When comparing mortgages, include HOA fees to see your true monthly housing cost. HOA fees typically range from $100-$500/month but can be higher in luxury communities. This calculator includes HOA fees in the total monthly payment and total cost calculations.

Question 12

What if mortgages have different home prices?

Accepted Answer

You can compare mortgages with different home prices. The calculator will show loan amounts, monthly payments, total interest, and total cost for each mortgage. However, comparing different home prices can be misleading - a $200,000 home will always have lower payments than a $400,000 home. For fair comparison, try to compare mortgages for similar homes or normalize the amounts. The comparison is most useful when home prices are similar.

Question 13

Can I compare more than 2 mortgages?

Accepted Answer

Yes, this calculator supports comparing 2-4 mortgages. Enter details for Mortgage A, Mortgage B, and optionally Mortgage C and D. The comparison table will show all mortgages side-by-side, making it easy to see which mortgage is best for your selected metric. Comparing more mortgages gives you more options but can make the decision more complex.

Question 14

What if I can't afford the monthly payment of the "best" mortgage?

Accepted Answer

If the mortgage with the lowest total cost has a monthly payment you can't afford, you may need to choose a mortgage with a longer term (higher total cost but lower monthly payment) or a larger down payment. Use the "Lowest Total Monthly Payment" metric to find the most affordable option. However, remember that longer terms increase total interest - try to find a balance between affordability and total cost.

Question 15

How do I know which comparison metric to use?

Accepted Answer

Use "Lowest Total Monthly Payment" if budget is your primary concern and you need the most affordable monthly payment. Use "Lowest Total Interest" if you want to minimize the cost of borrowing and can afford higher payments. Use "Lowest Total Cost" if you want the most economical mortgage overall, considering all costs. Use "Fastest Payoff" if you want to get out of debt as quickly as possible. Consider your financial situation and goals when choosing a metric.

Question 16

What is PMI and how does it affect comparison?

Accepted Answer

PMI (Private Mortgage Insurance) is insurance that protects the lender if you default. It's typically required when your down payment is less than 20%. PMI costs 0.5-2% of the loan amount annually and is added to your monthly payment. This calculator doesn't automatically include PMI, but you can add it as an extra monthly cost. Once you reach 20% equity, you can usually cancel PMI, reducing your monthly payment.

Question 17

Should I include taxes and insurance in the comparison?

Accepted Answer

Including taxes and insurance gives you a more accurate picture of your true monthly housing cost (PITI). However, property taxes and insurance are the same regardless of which mortgage you choose for the same home. If you're comparing mortgages for the same home, including them may not change which mortgage is best. If you're comparing mortgages for different homes, including them is essential to see the true cost difference.

Mortgage Comparison Calculator

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How to Calculate

Calculation Examples

Example 1: Same Home Price, Different APR

Example 2: 15-Year vs 30-Year Mortgage

Example 3: 10% Down vs 20% Down

Example 4: Closing Costs vs Higher APR

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