1. What is a Mortgage Comparison Calculator?

This calculator compares two mortgage options side-by-side, showing the total cost (principal + interest) for each loan and which option saves you more money over the life of the loan.

2. How Does the Calculator Work?

The calculator uses standard amortization formulas:

Where:

• \( P \) — Principal loan amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Number of payments (term in years × 12)

Explanation: The calculator computes monthly payments, then calculates how much of each payment goes toward principal vs interest over the entire loan term.

3. Importance of Mortgage Comparison

Details: Comparing mortgages helps identify the most cost-effective option. Even small differences in interest rates can result in significant savings over time.

4. Using the Calculator

Tips: Enter loan amounts, interest rates, and terms for two different mortgage options. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's more important - interest rate or loan term?
A: Both matter. A lower rate reduces monthly payments, but a shorter term means paying less interest overall.

Q2: Should I include taxes and insurance?
A: This calculator compares principal and interest only. For complete comparisons, consider adding estimated taxes and insurance.

Q3: How does extra payments affect the comparison?
A: Extra payments reduce total interest paid. This calculator shows baseline comparisons without extra payments.

Q4: What about adjustable rate mortgages (ARMs)?
A: This calculator assumes fixed rates. ARMs require more complex calculations as rates change over time.

Q5: How accurate are these calculations?
A: They're mathematically precise for fixed-rate loans, but actual lender terms may include additional fees.