A lower rate with higher fees isn’t always cheaper. Compare two offers over the time you’ll actually keep the loan.
How it works
Cost over the years kept = points + lender fees + interest paid in those years
Principal repaid is the same equity either way, so the comparison counts what you pay the lender: the upfront charges and the interest. Where one offer has the lower payment and the other the lower fees, the calculator shows the month they break even.
Keep in mind
- Compare offers for the same loan amount, term and lock period, made on the same day.
- Third-party costs such as title and appraisal are usually similar between lenders; compare the lender charges in section A of each Loan Estimate.
Questions
How do I compare two mortgage offers?
Line up the rate, the points and the lender fees from section A of each Loan Estimate, then compare the total over the years you expect to keep the loan. This calculator does the sum.
Is the APR enough to compare offers?
It helps, but it assumes you keep the loan for its full term. If you expect to sell or refinance sooner, the comparison over your own time frame is more accurate.
Should I pay points?
Only if you keep the loan past the break-even month. The mortgage points calculator works that out for one offer.
Related guides
- Refinancing
- Conventional loans
- First-time buyers
- Mortgage broker vs bank
- Discount points vs lender credits
