1. What is the 1% Mortgage Rate Difference Calculator?

This calculator shows the potential savings from a 1% reduction in your mortgage interest rate. It compares your current monthly payment with what your payment would be at a rate that's 1% lower.

2. How Does the Calculator Work?

The calculator uses the standard mortgage payment formula:

Where:

• \( M \) — Monthly mortgage payment
• \( P \) — Principal loan amount
• \( r \) — Monthly interest rate (annual rate divided by 12)
• \( n \) — Number of payments (loan term in years × 12)

Explanation: The calculator computes payments at your current rate and at a rate 1% lower, then shows the difference.

3. Importance of Rate Comparison

Details: Even small rate differences can lead to significant savings over the life of a loan. A 1% lower rate could save you thousands in interest payments.

4. Using the Calculator

Tips: Enter your loan amount, loan term in years, and current interest rate. The calculator will show your current payment, what it would be at 1% lower, and the monthly savings.

5. Frequently Asked Questions (FAQ)

Q1: How accurate is this calculator?
A: It provides accurate estimates for fixed-rate mortgages. Adjustable-rate mortgages may vary.

Q2: Does this include taxes and insurance?
A: No, this calculates only principal and interest payments.

Q3: How much could I save over the entire loan?
A: Multiply the monthly savings by the number of payments (term years × 12) for total savings.

Q4: Why does a small rate change make a big difference?
A: Interest compounds over time, so even small rate changes significantly affect total interest paid.

Q5: Should I refinance for a 1% lower rate?
A: Consider closing costs and how long you plan to stay in the home. Use this calculator to estimate your break-even point.