Does this calculator use APR or note rate?

The rate inputs are treated as nominal annual interest rates (often the note rate) for payment calculations. Points and fees are handled separately as upfront costs. It does not compute a full APR that annualizes closing costs into the rate; instead, it shows closing costs and payments side by side.

Are taxes, insurance, and mortgage insurance included?

No. The calculator focuses on principal and interest only so you can make clean comparisons between rate and fee structures. To estimate your full monthly payment, you would need to add property taxes, homeowner’s insurance, HOA dues, and any mortgage insurance separately.

How should I use the break-even months number?

Use break‑even months as a quick check against how long you expect to keep the loan. If the break‑even is much longer than your expected time horizon, paying extra upfront for a lower rate may not be worth it. If it’s shorter, it may make sense to choose the option with higher upfront costs but lower payments.

Does this account for tax deductions on mortgage interest or points?

No. The calculator works with pre‑tax dollars and does not model potential tax deductions on mortgage interest or points. Your after‑tax cost of borrowing may be lower, but it depends on your filing status, itemization, and tax law. A tax professional can help you analyze that side.

Can I compare different loan amounts or cash-out refis with this?

This tool assumes the same loan amount for both options so you’re comparing only rate and fee differences. For cash‑out refinances or scenarios where loan amounts differ, you can still use it as a rough guide, but a more detailed cash‑flow and net‑worth analysis is better.

finance calculator

Loan Rate Comparison / Refinancing

Compare two loan options side by side with rates, points, fees, and monthly payments. See monthly savings and a simple break-even on upfront costs.

Results

Payment A (P&I): $2,155
Payment B (P&I): $2,270
Closing costs A: $1,500
Closing costs B: $1,000
Monthly savings (B - A): $115
Break-even months on points/fees: 4.345

Overview

This loan rate comparison calculator lets you compare two loan options side by side—such as your current mortgage versus a refinance offer, or two competing lender quotes—with rates, points, and closing fees included.

Instead of looking only at the interest rate, you can see how upfront costs (points and lender fees) trade off against monthly principal‑and‑interest payments over a fixed term. The calculator shows each option’s payment, estimated closing costs, monthly savings, and a simple break‑even in months on any difference in upfront costs.

Use it as a quick sanity check before refinancing, locking in a rate, or deciding whether buying points actually makes sense for your time horizon.

How to use this calculator

Enter the loan amount and term in years that apply to both options (for example, a 30‑year fixed mortgage refinance balance).
Enter the annual interest rate (APR %) you are being offered for Option A and Option B.
Enter the discount points (as a percentage of the loan amount) and lender fees for each option to capture upfront costs.
Review the principal‑and‑interest payment and estimated closing costs for Option A and Option B.
Look at the monthly savings value to see which option has the lower monthly payment and by how much.
Check the break‑even months to understand how long it takes for the monthly savings to offset any higher upfront costs, then compare that to how long you expect to keep the loan.

Inputs explained

Loan amount: The principal balance you are borrowing or refinancing. For a refi, this is typically your remaining loan balance; for a purchase, it’s the amount financed after your down payment.
Term (years): The length of the loan in years (such as 15, 20, or 30). The same term is applied to both options so you can compare payments and break‑even on equal footing.
Rate A (APR %): The annual interest rate for Option A, expressed as a percentage. For fixed‑rate loans, this is usually the note rate you lock with your lender.
Points A (%): Discount points paid upfront for Option A, as a percentage of the loan amount. One point equals 1% of the loan (for example, 1 point on a $300,000 loan is $3,000).
Fees A: Other lender and third‑party closing costs associated with Option A, such as origination fees, underwriting, appraisal, or processing fees.
Rate B (APR %): The annual interest rate for Option B. This could be a higher‑rate, lower‑fee option, or a quote from a competing lender.
Points B (%): Discount points paid upfront for Option B, as a percentage of the loan amount.
Fees B: Other closing costs associated with Option B.

Outputs explained

Payment A (P&I): The estimated monthly principal‑and‑interest payment for Option A based on the loan amount, rate, and term you entered.
Payment B (P&I): The estimated monthly principal‑and‑interest payment for Option B.
Closing costs A: The total upfront costs for Option A, combining points (as a percentage of the loan amount) and any flat fees you entered.
Closing costs B: The total upfront costs for Option B.
Monthly savings (B - A): Payment B minus Payment A. A positive value means Option A has the lower payment and saves you this amount each month.
Break-even months on points/fees: How many months of monthly savings it takes to recover the difference in upfront costs between the two options. If there’s no monthly savings, this field may be blank or “N/A.”

How it works

For each option, the calculator estimates closing costs as: points (expressed as a percentage of the loan amount) plus any flat fees you enter.

It calculates the monthly principal‑and‑interest payment using the standard fixed‑rate loan amortization formula based on the loan amount, rate, and term.

Monthly savings is defined as Payment B − Payment A, so a positive number means Option A has the lower monthly payment (i.e., it “saves” that amount each month).

To estimate a simple break‑even, the calculator compares the difference in upfront costs between Option A and Option B and divides that by the monthly savings, giving you the number of months it takes for the cheaper‑payment option to recoup the extra upfront cost.

If there is no monthly savings (or the savings are negative, meaning the option with higher upfront costs also has a higher payment), the break‑even is not shown because there is no payback.

The tool focuses purely on principal and interest; taxes, insurance, and mortgage insurance are not included so you can compare rate/fee structures on equal footing.

Formula

Let L = loan amount
Let n = term in months = years × 12
Let r_A = rate A (annual, as decimal)
Let r_B = rate B (annual, as decimal)
Let p_A = points A (as decimal)
Let p_B = points B (as decimal)
Let f_A = fees A
Let f_B = fees B

Monthly rate for A = r_A ÷ 12
Monthly rate for B = r_B ÷ 12

Payment A = L × [ r_A/12 × (1 + r_A/12)^n ] ÷ [ (1 + r_A/12)^n − 1 ]
Payment B = L × [ r_B/12 × (1 + r_B/12)^n ] ÷ [ (1 + r_B/12)^n − 1 ]

Closing costs A = (p_A × L) + f_A
Closing costs B = (p_B × L) + f_B

Monthly savings = Payment B − Payment A  (positive → A is cheaper monthly)
Difference in costs = Closing costs A − Closing costs B
Break‑even months = Difference in costs ÷ Monthly savings  (only if Monthly savings > 0)

When to use it

Comparing your current mortgage to a potential refinance offer to see if the new rate justifies the closing costs.
Evaluating whether paying discount points to buy down the rate makes sense given how long you expect to keep the loan.
Comparing two lender quotes where one has a lower rate but higher fees and the other has a higher rate but lower closing costs.
Running scenarios for different term lengths (for example, 30‑year vs 15‑year refis) by changing the term and seeing how payments and break‑even change.
Helping clients or partners understand the trade‑off between upfront costs and monthly savings when they’re deciding whether to refinance.

Tips & cautions

If monthly savings are small and the break‑even period is longer than you expect to keep the loan, paying extra upfront for a slightly lower rate may not be worth it.
If you think you’ll move or refinance again within a few years, favor options with lower closing costs and shorter break‑even periods.
Remember that this calculator looks only at principal and interest; your full monthly housing payment will also include taxes, insurance, and possibly mortgage insurance or HOA dues.
When comparing quotes, make sure you’re using the same loan amount and term for each option so you’re not accidentally comparing apples to oranges.
Consider the opportunity cost of cash used to pay points—you might prefer to keep some cash in savings instead of squeezing every last dollar out of the rate.
Does not include mortgage insurance (MI), property taxes, homeowner’s insurance, HOA dues, or other housing costs that affect your full monthly payment.
Assumes fixed‑rate, fully amortizing loans with level payments; adjustable‑rate mortgages (ARMs) and interest‑only periods are not modeled.
Break‑even is a simple comparison of upfront costs versus monthly payment savings and does not use net present value (NPV) or tax effects.
Does not factor in potential tax deductibility of points or interest; real after‑tax costs may differ.
Uses a single loan amount for both options; scenarios where loan amounts differ (cash‑in refis, cash‑out refis) require more detailed modeling.

Worked examples

$350,000 loan, 30 years: 6.25% with higher fees vs 6.75% with lower fees

Option A: Rate 6.25%, 0.5 points, $2,000 fees.
Option B: Rate 6.75%, 0 points, $1,000 fees.
Closing costs A = 0.5% × $350,000 + $2,000 = $1,750 + $2,000 = $3,750.
Closing costs B = 0% × $350,000 + $1,000 = $1,000.
Payment A is lower than Payment B (exact amounts depend on the amortization formula).
Monthly savings = Payment B − Payment A (for example, ≈ $110/month).
Extra upfront cost for A ≈ $3,750 − $1,000 = $2,750; break‑even ≈ $2,750 ÷ $110 ≈ 25 months.
If you plan to keep the loan more than ~2 years, paying points for Option A may make sense; otherwise Option B might be better.

$250,000 loan, 15 years: paying points vs no points at similar rates

Option A: 5.00% with 1 point and $1,500 fees.
Option B: 5.375% with 0 points and $500 fees.
Closing costs A = 1% × $250,000 + $1,500 = $2,500 + $1,500 = $4,000.
Closing costs B = 0% × $250,000 + $500 = $500.
Payment A is lower than Payment B by some amount each month (for example, ≈ $60/month).
Difference in upfront costs ≈ $4,000 − $500 = $3,500.
Break‑even ≈ $3,500 ÷ $60 ≈ 58 months (just under 5 years). If you expect to sell within 3 years, paying points may not be worth it.

Refinance vs staying in a higher‑rate loan

Treat your current loan as Option B with its existing rate and very low or zero additional closing costs.
Enter the refinance quote as Option A with its new rate, points, and fees.
Use the monthly savings and break‑even output to see how long it takes for the refi to pay back its closing costs.
Compare that break‑even horizon with how long you realistically expect to keep the property or the loan.

Deep dive

Compare two loan or refinance options by interest rate, points, and closing fees to see monthly payments, closing costs, monthly savings, and simple break‑even months.

Use this loan rate comparison calculator to evaluate refinance offers, lender quotes, and points buy‑down scenarios before you lock in a rate.

FAQs

Does this calculator use APR or note rate?: The rate inputs are treated as nominal annual interest rates (often the note rate) for payment calculations. Points and fees are handled separately as upfront costs. It does not compute a full APR that annualizes closing costs into the rate; instead, it shows closing costs and payments side by side.
Are taxes, insurance, and mortgage insurance included?: No. The calculator focuses on principal and interest only so you can make clean comparisons between rate and fee structures. To estimate your full monthly payment, you would need to add property taxes, homeowner’s insurance, HOA dues, and any mortgage insurance separately.
How should I use the break-even months number?: Use break‑even months as a quick check against how long you expect to keep the loan. If the break‑even is much longer than your expected time horizon, paying extra upfront for a lower rate may not be worth it. If it’s shorter, it may make sense to choose the option with higher upfront costs but lower payments.
Does this account for tax deductions on mortgage interest or points?: No. The calculator works with pre‑tax dollars and does not model potential tax deductions on mortgage interest or points. Your after‑tax cost of borrowing may be lower, but it depends on your filing status, itemization, and tax law. A tax professional can help you analyze that side.
Can I compare different loan amounts or cash-out refis with this?: This tool assumes the same loan amount for both options so you’re comparing only rate and fee differences. For cash‑out refinances or scenarios where loan amounts differ, you can still use it as a rough guide, but a more detailed cash‑flow and net‑worth analysis is better.

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This loan rate comparison calculator is for educational and planning purposes only and is not mortgage, tax, or financial advice. It uses simplified assumptions for fixed‑rate amortizing loans and does not account for all costs, risks, or tax effects associated with borrowing or refinancing. Actual loan offers, APRs, and closing costs come from your lender and may differ from these estimates. Always review official loan disclosures and consult a qualified mortgage or financial professional before making borrowing decisions.