1. What is Mortgage Rate Difference?

The mortgage rate difference calculates the percentage point difference between two interest rates. This helps borrowers compare loan offers or evaluate refinancing opportunities.

2. How Does the Calculator Work?

The calculator uses the simple difference formula:

Where:

• \( Rate1 \) — First interest rate in percentage
• \( Rate2 \) — Second interest rate in percentage
• \( Diff \) — Difference in percentage points

Explanation: The calculation shows how much higher or lower one rate is compared to another in absolute terms.

3. Importance of Rate Difference Calculation

Details: Understanding rate differences helps borrowers make informed decisions about loan products, refinancing options, and potential savings.

4. Using the Calculator

Tips: Enter both interest rates as percentages (e.g., 3.25 for 3.25%). The calculator will show the absolute difference between them.

5. Frequently Asked Questions (FAQ)

Q1: How significant is a 0.5% rate difference?
A: A 0.5% difference can significantly impact monthly payments and total interest paid over the life of a loan.

Q2: Should I refinance if rates drop?
A: Consider the rate difference along with closing costs and how long you plan to stay in the home.

Q3: How does rate difference affect monthly payments?
A: Each percentage point difference typically changes the monthly payment by about $50 per $100,000 borrowed (30-year term).

Q4: Are rate differences the only factor to consider?
A: No, also compare loan terms, fees, and lender reputation when choosing between mortgage offers.

Q5: How often do mortgage rates change?
A: Rates can change daily based on market conditions, so it's important to compare current rates.