Side by Side Mortgage Comparison Calculator

Mortgage Comparison Formula:

\[ \text{Side Cost} = \text{PMT} \times n \]

PMT for Option 1:

USD

Term for Option 1:

months

PMT for Option 2:

USD

Term for Option 2:

months

Total Cost for Option 1:

Total Cost for Option 2:

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1. What is Side by Side Mortgage Comparison?

The Side by Side Mortgage Comparison allows you to compare two different mortgage options by calculating their total costs over the loan term. This helps borrowers make informed decisions between different interest rates, terms, and payment options.

2. How Does the Calculator Work?

The calculator uses the simple formula:

\[ \text{Total Cost} = \text{Monthly Payment} \times \text{Number of Payments} \]

Where:

\( \text{Monthly Payment} \) — Your fixed monthly mortgage payment (including principal and interest)
\( \text{Number of Payments} \) — Total number of monthly payments over the loan term

Explanation: This straightforward calculation shows the true cost of each mortgage option by multiplying the payment amount by the total number of payments.

3. Importance of Mortgage Comparison

Details: Comparing mortgage options helps you understand the long-term financial impact of different loan terms, interest rates, and payment amounts. It reveals which option will cost you less over time.

4. Using the Calculator

Tips: Enter the monthly payment amount and loan term (in months) for two different mortgage options. The calculator will compute and display the total cost for each option, allowing for easy comparison.

5. Frequently Asked Questions (FAQ)

Q1: Should I choose the option with the lowest total cost?
A: Not necessarily. While total cost is important, also consider your monthly budget, how long you plan to stay in the home, and potential tax benefits.

Q2: Does this include property taxes and insurance?
A: No, this calculation only includes principal and interest. For complete comparison, you may want to add estimated taxes and insurance to both options.

Q3: How does interest rate affect the comparison?
A: Higher rates increase your monthly payment and total cost. Lower rates decrease them, but may come with higher upfront costs (points).

Q4: What about adjustable rate mortgages (ARMs)?
A: This calculator assumes fixed payments. For ARMs, you'd need to estimate future rate adjustments for accurate comparison.

Q5: Should I consider refinancing opportunities?
A: Yes, if you expect to refinance before the loan term ends, the shorter-term comparison may be more relevant.