Fixed-rate loan comparison calculator

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.