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How the Mortgage Comparison Calculator Works
You enter details for Loan Option A and Loan Option B, including:
- Home price
- Down payment
- Interest rate
- Loan term
- Annual taxes & insurance
- PMI (if applicable)
- HOA dues
- Extra principal payments
The calculator then shows a complete breakdown of:
- Monthly payments for each component
- Total monthly payment for both loans
- Total interest paid
- Years to pay off the loan (with and without extra payments)
- Side-by-side comparison showing which option saves more money
Understanding Your Monthly Payment Breakdown
Each loan option displays how much you pay monthly for:
1. Principal & Interest (P&I)
The core mortgage payment based on loan amount, loan term, and interest rate.
2. Property Taxes
Annual taxes divided into monthly installments (paid through escrow).
3. Homeowners Insurance
Protects your home and belongings.
4. PMI (Private Mortgage Insurance)
Applies to conventional loans with less than 20% down. Important differences between options can include:
- Whether PMI applies
- How long PMI lasts
- Total PMI cost
5. HOA Fees (if applicable)
Monthly dues for condos or properties with associations.
6. Extra Monthly Principal
Paying a little extra each month can:
- Shorten your payoff time
- Reduce interest significantly
- Build equity faster
How to Compare Two Mortgage Options
Here’s what to look for when comparing Loan A vs. Loan B:
1. Monthly Payment Differences
Even a small difference in interest rate may lower or raise your payment by hundreds of dollars per month.
Example:
A 0.5% change in interest rate can increase payments by $100–$150 per month.
2. Total Interest Paid
The real cost of a mortgage is not the home price – it’s:
Total interest + principal + insurance + taxes + fees
A lower rate or shorter term often saves tens of thousands over the loan life.
3. Effect of Loan Term (15-year vs 30-year)
30-year loan
- Lower monthly payment
- Higher total interest
15-year loan
- Higher monthly payment
- Much lower total interest
- Faster payoff
Use the calculator to see the exact interest difference in your scenario.
4. PMI Cost Differences
Loan options with less than 20% down may include PMI, but:
- PMI cost varies by loan program
- Some loans remove PMI automatically
- Extra monthly principal may eliminate PMI faster
5. Benefits of Extra Monthly Principal
If you add even:
- $50–$200/month → you can save thousands in interest
- A targeted payoff amount → you can eliminate PMI faster
- A lump sum extra payment → instantly reduce total interest
The calculator shows both standard payoff and accelerated payoff for both loan options.
When Should You Use a Mortgage Comparison Calculator?
This tool is ideal when:
- You’re comparing rates from different lenders
- You’re choosing between 15-year and 30-year loans
- You’re deciding whether to buy points
- You want to see the impact of extra principal
- You’re comparing FHA vs. conventional
- You’re deciding whether to refinance
Mortgage decisions have long-term financial implications—this calculator helps you make them confidently.
Mortgage Loan Comparison FAQ
Why should I compare two mortgage loans?
Comparing mortgage loans helps you see differences in monthly payment, total interest, and long-term affordability. Even a small rate change can save thousands over time.
What is the most important factor when comparing loans?
The total interest paid over the full loan term is often the biggest difference. A lower rate or shorter term typically results in major long-term savings.
Does a lower monthly payment always mean a better loan?
Not necessarily. A lower payment may come with a higher interest cost or a longer payoff period. Total lifetime cost matters more than monthly affordability alone.
How does PMI affect loan comparisons?
Private Mortgage Insurance (PMI) adds to your monthly cost if your down payment is under 20%. Loans with PMI may cost more over time unless the PMI drops off quickly.
How do extra payments change the comparison?
Extra monthly principal payments can dramatically reduce interest and shorten the loan term. Sometimes a slightly higher rate becomes cheaper when extra payments are added.