APR Comparison Calculator

How to Use This Calculator

This calculator has four modes for comparing loans. Compare Loan Offers lets you enter offers from different lenders and see which saves the most. Refinance Analysis shows your break-even point and whether refinancing pays off. APR vs Interest Rate shows how fees increase your borrowing cost. Credit Score Impact shows what rates you qualify for and how much better credit saves. Compare at least 3 loan offers - getting multiple quotes can save you $5,000-$20,000 over the life of your loan.

Mode	Best For	What You'll Learn
Compare Loan Offers	Shopping for a new loan	Which offer saves the most money
Refinance Analysis	Considering refinancing	Break-even point and total savings
APR vs Rate	Understanding loan costs	How fees affect your true rate
Credit Score Impact	Deciding whether to improve credit first	Potential savings from better credit

What Is APR?

APR is your true borrowing cost, not just the interest rate you see in ads.

APR stands for Annual Percentage Rate. The difference? Your interest rate (say, 6.5%) only counts what you pay on the borrowed amount. APR includes the fees you pay to get the loan - origination fees, appraisal fees, title fees, all of it rolled into one number.

Why APR Is Higher Than Your Rate

APR is always higher than your interest rate. It has to be - it includes fees on top of interest.

Example: You pay $3,000 in fees for a $300,000 loan at 6.5%. Your APR? About 6.75%. That extra 0.25% represents those fees spread over 30 years. More fees mean higher APR.

What's Included: Your interest rate + origination fees + discount points + mortgage insurance premiums + some closing costs.

What's NOT Included: Third-party fees (appraisal, title search, attorney fees), property taxes, homeowners insurance, HOA fees. You'd pay these whether you borrowed money or not.

So APR isn't perfect. Two loans with identical APRs can have different total costs if one has higher third-party fees. Get Loan Estimates from every lender and compare line by line.

Understanding Mortgage Points

Two kinds of points. They work completely differently.

Discount points: Optional. You pay upfront to lower your rate.
Origination points: Required fee the lender charges to process your loan.

When someone says "points" without specifying, they mean discount points.

One point = 1% of your loan amount. On a $300,000 loan, one point costs $3,000. Each point lowers your rate by roughly 0.25%, though the exact reduction varies by lender and market conditions - anywhere from 0.125% to 0.375%. Ask your lender for exact numbers before buying.

Example: Pay $6,000 (two points) on a $300,000 loan. Your rate drops from 6.5% to 6.0%.

When to Buy Points

Buy if you're staying put. Keeping the loan 10+ years? Rates staying high? Buy.

Skip if you're moving in 3-5 years or refinancing when rates drop. Also skip if you'd rather keep cash for your down payment or emergency fund. Monthly savings from points run $50-$100 per point.

How many? Most people buy 0-2 points. Past two points, diminishing returns kick in. The third point often saves only 0.125% vs 0.25% for the first point. Break-even stretches longer with each additional point.

Tax Deductibility

Home purchase: Discount points are tax deductible in the year you pay them (if you itemize).

Refinance: Deduct points over the loan's life. $3,000 in points on a 30-year refi = $100 deduction per year for 30 years. Consult a tax pro for your situation.

When to Refinance

Refinancing = new mortgage replacing your current one. Why do it? Lower your rate, cut your payment, shorten your term, switch from ARM to fixed, drop PMI, or tap your equity.

Forget the old "1% rate drop" rule. Whether refinancing works depends on your break-even point and how long you're staying. Even a 0.5% drop saves money if you're not moving for 7-10 years.

Improved credit is a reason to refinance. Take out your mortgage with a 680 score and now have 760? You'll get better rates even if the market hasn't changed. Same if you've paid your balance below 80% of your home's value - you can drop PMI.

Switch from ARM to fixed when your ARM's about to adjust up or you want stable payments. Go from 30-year to 15-year if you can afford the higher payment and want to save $50,000-$100,000 in interest.

The cost: Refinancing costs 2-5% of your loan amount. On a $250,000 mortgage? Expect $5,000-$12,500. Appraisal, title search, title insurance, lender fees, recording fees. You can shop some of these around, not all.

Skip the math and this happens: You save $150 monthly, pay $7,000 to refinance, sell 2 years later. You saved $3,600 but spent $7,000. Net loss: $3,400. Don't be that person.

The Clock-Reset Trap

You're 5 years into a 30-year mortgage. 25 years left. You refinance into a new 30-year loan for a lower payment.

Your payment drops. Sounds great.

Not so fast. Now you're paying for 35 total years instead of 30. Those extra 5 years of interest can cost more than the lower rate saves you.

Better move: Refinance into a 25-year or 20-year loan. Payment won't drop as much, but you won't extend your payoff. Or take the 30-year but keep making your old payment - you'll pay it off early and save tens of thousands in interest.

No-Closing-Cost Refinance

Sounds good - refinance without paying $5,000-$10,000 upfront. But you're not avoiding costs. The lender either rolls costs into your loan balance or charges a higher rate.

Roll into loan balance = you pay interest on those costs for 30 years. Higher rate = you pay more monthly for the loan's life.

When no-closing-cost works: You won't keep the loan long. Moving in 3 years? Paying a slightly higher rate beats dropping $7,000 upfront you won't recoup.

When it doesn't: You're keeping the loan 10+ years. Pay closing costs upfront, get the lowest rate, save more long-term.

How to Compare Loans Fairly

Lowest rate ≠ cheapest loan. Most borrowers miss this.

You need total cost over the time you'll keep the loan. A 6.0% rate with $8,000 in fees costs more than 6.25% with $2,000 in fees if you only keep it 5 years.

Compare apples to apples. Same loan amount. Same term. Don't compare a 30-year to a 15-year - completely different payments and total costs.

Get it in writing: Lenders must provide a Loan Estimate within 3 business days of applying. Standardized form, same format everywhere. Don't compare rates over the phone - get actual Loan Estimates from every lender.

Page 1: Rate, monthly payment, cash to close
Page 2: All closing costs by category
Page 3: Payment changes, 5-year total

Compare the same sections across all your Loan Estimates. Line by line.

APR vs rate: APR (page 1) is your best comparison number. It includes rate plus most fees. One loan: 6.0% rate, 6.5% APR. Another: 6.25% rate, 6.3% APR. The second is cheaper despite the higher rate.

But APR assumes you keep the loan its full term. Most people don't. Keeping the loan 7 years? Calculate 7-year cost, not 30-year cost. High-fee loans cost more short-term even with better APRs.

Shop 3-5 lenders. Get 3-5 quotes. Rates and fees vary between lenders, even on the same day.

Example: Lender A quotes 6.5% with $3,000 in fees. Lender B quotes 6.25% with $4,000 in fees. Lender C quotes 6.5% with $1,500 in fees. You won't know Lender C exists unless you shop.

Apply to all lenders within 14 days. Multiple mortgage apps in that window = one credit inquiry. After 14 days? Each app dings your score separately.

Lock your rate: Rates change daily. Sometimes multiple times per day. A rate lock guarantees your rate for 30-60 days. No lock? Your rate can jump before closing.

Get everything in writing: exact rate, points, and lock period.

Longer locks cost more. 30-day lock: free. 45-day: 0.125% of loan. 60-day: 0.25%. Lock only as long as you need. Close in 30 days? Don't pay for 60.

Watch for bait-and-switch: Some lenders advertise ultra-low rates to hook you. You apply. Suddenly you "don't qualify" for that rate. Your 5.75% becomes 6.5% because of your credit, loan size, or down payment.

Get quotes in writing based on YOUR numbers, not generic ads.

Question rates well below market. Five lenders quote 6.5%, one quotes 5.9%? That 5.9% has strings - high fees, ARM, balloon payment, or requirements you don't meet.

Understanding Loan Fees

Dozens of fees make up closing costs. Some are legitimate. Some negotiable. Some pure junk.

Understanding the difference saves you $2,000-$5,000.

Origination: What the lender charges to process your loan. Runs 0.5-1% of the loan amount. $1,500-$3,000 on a $300,000 loan.

Negotiable? Yes. Some lenders charge zero origination but offset with a slightly higher rate. Others charge a flat fee regardless of loan size.

Origination points = origination fees, just expressed differently. One origination point = 1% of loan. Don't confuse with discount points (those buy you a lower rate; origination points don't).

Third-party fees: These go to companies other than your lender:

• Appraisal: $300-$700 (values the property)
• Title search & insurance: $1,000-$3,000 (verifies clear title)
• Attorney/settlement: $500-$1,500 (handles closing)
• Credit report: $25-$50
• Survey: $300-$500 (maps property boundaries)
• Recording: $100-$300 (county records mortgage)

You can shop some of these around. Others are non-negotiable.

See 2 points on your Loan Estimate but your rate isn't lower? Those are origination points, not discount points.

Junk fees - push back: Administrative fees. Processing fees. Underwriting fees. Document prep fees. Courier fees.

Pure profit padding. Processing and underwriting? Should be in the origination fee. Document prep and courier? Minimal actual cost.

Multiple small fees totaling several hundred dollars? Push back. Ask the lender to waive or roll into origination fee. Many will, especially when you mention competing offers.

Typical costs: Total closing costs: 2-5% of loan amount. On a $300,000 loan, expect $6,000-$15,000.

Breakdown:
Lender fees (origination, points, underwriting): 1-2%
Third-party fees (appraisal, title, attorney): 1-3%

Prepaid property tax and insurance aren't true closing costs - you'd pay them anyway. Just collected at closing.

Loan Comparison Mistakes to Avoid

Comparing loans with different terms makes no sense.

A 15-year loan always has higher monthly payments and lower total interest than a 30-year loan, regardless of rate. You're not comparing apples to apples. Compare 15-year loans to other 15-year loans. 30-year to 30-year.

Deciding between 15 and 30 years? Different calculation. But don't compare a 15-year at 5.5% to a 30-year at 6.0% and think you found a bargain.

The 7-year problem: You compare loans assuming 30 years. You'll refinance or move in 7.

Average homeowner: 7-9 years before they move or refinance. Yet borrowers calculate what they'll pay over 30 years, pick the loan that's cheapest at year 30, and ignore years 1-10.

Low-fee loans beat low-rate loans when you're not keeping it long. Calculate total cost over 7 years, not 30. Different winner.

One quote isn't enough. You get one offer and accept it. Seems easy enough.

Wrong. Rates and fees vary substantially between lenders. Same borrower, same day, 0.5% rate difference and $5,000 fee difference between three quotes? Normal.

Three quotes = $5,000-$20,000 saved over the loan. A few hours of work. That's $2,000+ per hour. Do it.

That online rate? Fine print you missed:

Excellent credit (760+). 20% down. Perfect debt-to-income. Buying 2 discount points ($6,000 upfront). Oh, and that's an ARM, not the fixed-rate you want.

Your actual quote? 6.5%. The advertised rate doesn't apply to you.

Get personalized quotes based on your credit score, down payment, and loan size. The advertised rate means nothing.

Read the Loan Estimate: You get a 3-page Loan Estimate. You glance at the interest rate. Done.

Wrong document to skim. Everything is there - rate, points, fees, monthly payment, total cost, APR. Read all three pages.

Check:

• Loan amount, down payment, term match your request?
• Interest rate and fees match the quote?
• APR on page 1
• 5-year total payment (page 1, bottom)
• All fees on page 2 (where junk fees hide)

Compare Loan Estimates from different lenders side-by-side. That's how you spot the best deal.

ARM APR is useless: APR works for fixed-rate loans. APR on an adjustable-rate mortgage? Misleading.

Why? APR assumes the rate never adjusts. But ARM = adjustable-rate mortgage. The rate will adjust. The APR shown is meaningless for ARMs.

Comparing ARM to fixed-rate using APR? Meaningless. Compare ARMs based on initial rate, how often it adjusts (1 year? 5 years?), rate caps (max increase per adjustment and lifetime), and worst-case rate.

Frequently Asked Questions

Should I compare APR or interest rate?

Compare both. Interest rate shows what you pay on the borrowed amount. APR includes fees and shows your real borrowing cost. A low rate with high fees gives you a worse APR than a higher rate with low fees.

When should I refinance?

Calculate your break-even point. Refinancing costs $6,000 and saves $200 monthly? You break even in 30 months. Keep the loan past 30 months and you save money. Sell or refinance before and you lose.

Are closing costs included in APR?

Some are, some aren't. APR includes lender fees (origination, discount points, mortgage insurance). APR doesn't include third-party fees (appraisal, title, attorney). Check the Loan Estimate for total closing costs.

How do I compare loans with different terms?

Don't compare 15-year to 30-year loans unless you're choosing between term lengths. A 15-year loan always has higher payments and lower interest regardless of rate. Compare 15-year to 15-year, 30-year to 30-year.

Is lower APR always better?

Not if you're keeping the loan short-term. APR assumes you keep the loan for its full term. A loan with lower APR but higher fees costs more over 5-7 years than a loan with higher APR and lower fees.

Can I negotiate loan fees?

Origination fees are negotiable. Some lenders waive them for a slightly higher rate. Third-party fees (appraisal, title) vary by provider - shop around. Recording fees are set by the county and non-negotiable.

How many loan offers should I compare?

Get quotes from 3-5 lenders. Apply within a 14-day window so multiple applications count as one credit inquiry. Rates and fees vary enough between lenders that shopping saves money.

What's the difference between discount points and origination points?

Discount points (optional) lower your rate. Pay 1% of the loan to cut your rate roughly 0.25%. Origination points (required) are lender processing fees. Same calculation, different purposes.