1. What is Mortgage Interest Rate Difference?

The Mortgage Interest Rate Difference calculates the numerical difference between two mortgage interest rates. This comparison helps borrowers understand how much they might save or pay extra when choosing between different loan options.

2. How Does the Calculator Work?

The calculator uses a simple subtraction formula:

Where:

• \( Rate1 \) — First interest rate (percentage)
• \( Rate2 \) — Second interest rate (percentage)
• \( Diff \) — Difference between the two rates

Explanation: A positive result means Rate1 is higher, while a negative result means Rate2 is higher. The magnitude shows how much one rate differs from the other.

3. Importance of Rate Comparison

Details: Comparing mortgage rates is crucial for financial planning. Even small differences (0.25%-0.5%) can translate to significant savings or costs over a 15-30 year loan term.

4. Using the Calculator

Tips: Enter both interest rates as percentages (e.g., 3.5 for 3.5%). The calculator will show the absolute difference between them.

5. Frequently Asked Questions (FAQ)

Q1: How significant is a 0.5% rate difference?
A: On a $300,000 30-year loan, 0.5% difference means about $90/month or $32,000 over the loan life.

Q2: Should I always choose the lowest rate?
A: Not necessarily - consider closing costs, loan terms, and your financial goals. Sometimes paying points for lower rate makes sense.

Q3: How often do mortgage rates change?
A: Rates can change daily based on market conditions. It's good to compare rates from multiple lenders.

Q4: What's considered a good rate difference?
A: A difference of 0.25% or more is usually worth considering, especially for long-term loans.

Q5: Does this calculator account for APR?
A: No, this compares nominal interest rates. For complete comparison, consider APR which includes fees.