1. What is Mortgage Interest Rate Comparison?

The Mortgage Interest Rate Comparison calculator helps you compare two different mortgage interest rates by calculating their ratio. This shows how much more (or less) expensive one rate is compared to another.

2. How Does the Calculator Work?

The calculator uses a simple comparison formula:

Where:

• \( Rate1 \) — First mortgage interest rate (%)
• \( Rate2 \) — Second mortgage interest rate (%)

Explanation: A result of 1 means the rates are equal. A result greater than 1 means Rate1 is higher, while less than 1 means Rate1 is lower than Rate2.

3. Importance of Rate Comparison

Details: Comparing mortgage rates helps borrowers understand the relative cost difference between loan options and make informed financing decisions.

4. Using the Calculator

Tips: Enter both interest rates as percentages (e.g., 3.5 for 3.5%). Rate2 cannot be zero. The calculator will show the ratio of Rate1 to Rate2.

5. Frequently Asked Questions (FAQ)

Q1: How should I interpret the comparison result?
A: A result of 1.10 means Rate1 is 10% higher than Rate2. A result of 0.90 means Rate1 is 10% lower than Rate2.

Q2: Does this account for different loan terms?
A: No, this only compares the interest rates. For full loan comparisons, consider using an amortization calculator.

Q3: Should I only consider interest rates when choosing a mortgage?
A: No, also consider loan terms, fees, points, and other costs. The annual percentage rate (APR) provides a more complete cost picture.

Q4: How small a rate difference matters?
A: Even 0.25% can make a significant difference in total interest paid over a 30-year mortgage.

Q5: Does this work for adjustable-rate mortgages (ARMs)?
A: You can compare initial rates, but ARM comparisons should also consider rate adjustment caps and indexes.