How to compare two loan offers before you sign
A 0.25% rate gap is not a rounding error. Compare monthly payment, total interest, and fees on the same loan amount and term.
A 0.25 percentage-point lower rate on a $250,000 30-year loan saves about $14,700 in total interest.
Same principal, same term, then look at the rate
To compare two loan offers, freeze the amount and the term first. If one quote is 30 years and the other is 15, you are not comparing the same product. Enter both rates and any origination fees the lender listed.
A 0.25 percentage-point lower rate on a $250,000 30-year loan saves about $14,700 in total interest. That is larger than most closing credits you will be offered to “take the higher rate.”
Fees can erase a cheaper rate
Origination, discount points, and “processing” line items are interest by another name if you pay them in cash at closing. Convert points to dollars (one point is 1% of the loan) and add them to the cost of that quote.
If the cheaper-rate loan needs two points on $250,000, you are paying $5,000 up front. The loan comparison calculator is for the payment and interest; add fees on paper so you do not crown the wrong winner. APR helps when the term matches — use the APR calculator if you only have a rate and fees.
Then size the payment you will actually make
After you pick a quote, run it through the best mortgage calculator so the monthly principal and interest is in the same place as taxes and insurance you still have to add. Signing the lower payment that you cannot refinance later is how people get stuck.
This is the last buying-search in the cluster. The pillar is best calculators before you buy a house.
Frequently asked questions
How do I compare two loan offers?
Put the same principal and term on both quotes, then compare monthly payment and total interest. A lower rate with high origination fees can still lose.
Is a lower monthly payment always the cheaper loan?
No. A longer term cuts the monthly number and raises total interest. Compare total interest and fees, not only the payment.
How to compare two loan offers before you sign is part of the Finance cluster on Qalculators. Use the related tools below to run the numbers instead of estimating by hand.
Results depend on the values you enter. Treat them as planning estimates and confirm important decisions with a professional when needed.