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Mortgage Comparison Formula:
Compares total cost of two mortgages.
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The Mortgage Comparison Calculator helps you compare the total cost of two different mortgage options to determine which one would save you more money in the long run.
The calculator uses the following formula:
Where:
Explanation: The formula calculates the total interest paid for each loan (total payments minus principal) and then compares the two to show which loan would cost you less overall.
Details: Comparing mortgages helps you make informed financial decisions. A lower monthly payment doesn't always mean a better deal if the loan term is longer, as you might pay more interest overall.
Tips: Enter all required values for both loans. Make sure to use consistent units (USD for amounts, months for durations). The calculator will show the difference in total cost between the two loans.
Q1: Should I always choose the loan with the biggest savings?
A: While savings is important, also consider your monthly cash flow, prepayment options, and other loan terms before deciding.
Q2: Does this calculator account for variable rate loans?
A: No, this assumes fixed payments. For variable rate loans, you'd need to make projections about future rate changes.
Q3: What if one loan has points or fees?
A: You should include any upfront fees in the principal amount for accurate comparison.
Q4: How does refinancing factor into this comparison?
A: You can compare your current loan with a potential refinance option to see if refinancing would save you money.
Q5: What about tax deductions on mortgage interest?
A: This calculator shows pre-tax comparisons. Consult a tax professional to understand how mortgage interest deductions might affect your specific situation.