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.
Learn more about Points and Credits
After 9 years 2 months, Option A will be less expensive than Option B
When we took into account upfront costs and interest, both options cost the same at the 9 year 2 month mark. If you plan to own your home less than 9 years 2 months, Option B is a better choice.
This is when both loan options cost the same amount of money overall. After this, your total cost for one loan may be higher than the other.
Points and credits
Points are a one-time payment you make at closing in exchange for a lower rate. Credits are a rebate you receive to help cover closing costs, resulting in a higher interest rate.
This is the interest you’ll be charged for your loan each year. It’s slightly different than your Annual Percentage Rate (APR), which also takes into account things like taxes and insurance.
This is the amount you pay toward the principal (and interest) on a monthly basis. For a fixed loan, this payment will stay the same throughout the life of the loan.
This is the amount you end up paying over the life of the loan — it takes into account the initial amount you borrowed, as well as the interest.
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.
What to look for when comparing mortgage rates
Learn how to read a mortgage rate table—a powerful comparison tool to help you choose the best home loan for your needs—in this new article from Better Mortgage.
Points, credits, and how to decide if they’re right for you
When looking at a mortgage, paying points means paying more upfront for a lower interest rate. On the other hand, getting credits means paying less at closing in exchange for a higher interest rate.
What documents will I need for my mortgage?
Mortgage paperwork can often seem confusing, but this handy guide breaks down exactly what documents you’ll need.