1. What is the Mortgage Comparison Tool?

The Mortgage Comparison Calculator helps you compare two different mortgage payment options by calculating the difference (Delta) between them. This tool is useful when evaluating different loan terms, interest rates, or refinancing options.

2. How Does the Calculator Work?

The calculator uses a simple formula:

Where:

• \( PMT_1 \) — First mortgage payment amount
• \( PMT_2 \) — Second mortgage payment amount
• \( \Delta \) — Difference between payments

Explanation: The equation calculates the absolute difference between two mortgage payments, helping you understand how much you could save (or spend more) with one option versus another.

3. Importance of Mortgage Comparison

Details: Comparing mortgage payments is crucial for financial planning. Even small differences in monthly payments can add up to significant amounts over the life of a loan.

4. Using the Calculator

Tips: Enter both mortgage payment amounts in USD. The calculator will show you the difference between them and display both values for easy comparison.

5. Frequently Asked Questions (FAQ)

Q1: What factors affect mortgage payments?
A: Principal amount, interest rate, loan term, property taxes, insurance, and PMI all contribute to your monthly payment.

Q2: How much difference does 0.25% interest rate make?
A: On a $300,000 loan, a 0.25% rate difference equals about $44/month or $15,840 over 30 years.

Q3: Should I always choose the lowest payment?
A: Not necessarily. Consider total interest paid, loan term, and your financial goals. A shorter term with higher payments may save you money long-term.

Q4: How does refinancing affect payments?
A: Refinancing can lower payments by reducing interest rate or extending loan term, but may increase total interest paid.

Q5: What's more important - payment amount or interest rate?
A: Both matter. Lower rates reduce total cost, while payment amount affects monthly cash flow. Use this tool to compare scenarios.