Fixed-rate loan comparison calculator
Our loan comparison calculator is designed to show you when the costs of your two fixed-rate loan options are the same — also known as the break-even period. So whether you stay in your home for 5 years, or 25, you’ll have all of the info you need to make the right decision about which loan is right for you.
How to choose a home loan
It can be overwhelming to evaluate your home loan options, but it doesn't have to be. As it
turns out, there are a few important numbers you can focus on first. Our loan comparison
calculator takes into account the length of a loan, as well as the interest rate, loan
amount, and whether you'll have points or credits. Once you've decided to go with a fixed
rate instead of an adjustable one, you'll want to start to consider all of those details.
We're here to help them make a little more sense along the way.
First up, you'll want to think about the term. In other words, would you like to make
smaller payments over a longer amount of time? Or would you prefer to make larger payments,
but over a shorter period of time? The loan amount could vary too, based on how much of your
assets you're willing to use for a down payment. Trying out both options show you how much
you save each month, as well as over time, so it's easier to weigh the benefits.
Some of the most confusing factors you'll tackle when you're comparing loan options are the
interest rate and points and credits. Luckily, they're closely connected to one another.
Once you understand that relationship, they're easier to compare. Basically, most loan
options will have the option of either points or credits, and that has an effect on the
interest rate that's available to you. When you choose a loan option with points, you're
opting to pay more upfront at closing in exchange for a lower interest rate. So while your
costs are higher at first, you may notice you pay less in interest over the life of the
loan. On the other hand, choosing a loan option with credits means you'll save some money
upfront on closing costs in exchange for a higher interest rate. This is a great option if
you're hoping to keep costs lower at first, but it does cost more over time.
All of these factors work together, so it's best to compare their effects over time by using
a tool like our calculator that stacks them against each other. At the end of the day, a
major question you'll need to tackle is: how long do you plan to stay in your new home? For
example, if you plan to sell or refinance before your break-even period (the point at which
both loan options cost the same), you'll want to choose the loan option that costs less in
the short term. However, if you plan to stay in that home for the life of the loan, you
might care a little less about the short-term costs, and instead you will want to pay more
attention to how the costs shift after that break-even period. In other words, which loan
option costs less during the time you'll be living in the home, or before you refinance?
If you're comparing drastically different fixed-rate loan options — with varying terms and
amounts, for example — you may not have a break-even period at all. In those cases, you'll
also want to think about how long you plan to stay in the home, as well as which option is
more financially feasible for you.
Disclaimer: This home affordability calculator is made for illustrative purposes only. Accuracy is not guaranteed.