Mortgage Comparison Tool

Why two mortgages with the "same rate" aren't equal

When you shop for a home loan, lenders quote a tempting interest rate — but the rate alone hides the real cost. One loan might charge a lower rate only because you paid points up front; another might bury fees in closing costs. This tool lets you put two or three loan offers side by side and compares them on the numbers that actually matter: monthly payment, total interest, total amount paid, the true APR including up-front fees, and how many months it takes for a cheaper-but-pricier-up-front option to pay for itself.

The monthly payment formula

Each loan's monthly payment uses the standard amortization formula. With principal P, a monthly interest rate r (the annual rate divided by 12), and n total monthly payments (years × 12):

monthly = P × r × (1 + r)^n / ((1 + r)^n − 1)

Total paid is simply that monthly figure times n, and total interest is total paid minus the principal. So a small change in rate, compounded across 360 payments on a 30-year loan, swings the lifetime interest by tens of thousands of dollars — which is why eyeballing the monthly number alone is misleading.

A worked example

Compare two $400,000 30-year loans. Loan 1 is 6.5% with no points and $5,000 closing. Loan 2 is 6.0% with 1 point (1% of the loan = $4,000) and $5,000 closing. Loan 1's monthly payment is about $2,528; Loan 2's is about $2,398 — a saving of roughly $130 a month. But Loan 2 cost an extra $4,000 up front for the point. Divide $4,000 by the $130 monthly saving and the tool reports a break-even of about 31 months. Keep the loan longer than that and the lower rate wins; sell or refinance sooner and the points were wasted. The tool flags the offer with the lowest total cost (monthly payments plus up-front fees) with a star.

What APR really tells you

The advertised rate ignores fees; the APR folds them in. This tool computes APR the rigorous way — it treats your up-front points and closing costs as money you didn't actually receive, so your net proceeds are the loan amount minus those fees, then it solves (using Newton–Raphson iteration) for the single interest rate that makes those payments equal the net proceeds. The result is the effective rate you're truly paying. That's why a loan with a low headline rate but heavy points can show a higher APR than a slightly higher-rate loan with no fees: APR exposes the cost the rate hides.

How to read the comparison table

• Monthly payment — what leaves your account each month. Lower is easier on cash flow but says nothing about total cost.
• Total interest / total paid — the lifetime cost if you keep the loan to term. This is where small rate differences become large dollar differences.
• Upfront — points plus closing costs, the cash you need at signing.
• APR — the single best apples-to-apples number, because it blends rate and fees.
• Break-even vs #1 — how many months of monthly savings it takes to recover the extra up-front cost relative to the first loan. The starred row is the lowest total cost overall.

Common mistakes when comparing loans

The biggest is choosing on monthly payment alone — a longer term lowers the monthly figure while quietly raising total interest. The second is ignoring your time horizon: paying points to buy down the rate only pays off if you hold the loan past the break-even point, so a buyer planning to move in three years should weight up-front fees heavily. The third is forgetting that this tool models principal and interest only — it doesn't include property tax, homeowners insurance, PMI, or HOA dues, which are real monthly costs your lender's escrow estimate will add on top. Use the APR and break-even figures to rank the loans, then layer those other costs into your budget separately. All calculations run in your browser; no financial details are sent anywhere.