Loan Comparison Calculator
A loan is more than its principal and interest. It includes other expenses like monthly fees, closing costs, and for those using the VA lending program to purchase their home, a funding fee. When it comes to getting the best deal possible on a loan, you’ll want to consider all relevant costs. Differences in loan terms and interest rates can have a big impact on your monthly payments and the amount you’ll pay over the life of each loan. Our loan comparison calculator can be used to help itemize each factor that affects your monthly payments. This tool allows you to put yourself into a better position financially by comparing mortgage types. Then, you can choose a loan type that fits your budgeting needs.
How Can I Optimize a Loan Comparison Calculator?
To compare mortgage loans by optimizing a loan comparison calculator, you will need to provide (to the best of your ability) the most accurate information for the inputs below. After you’ve completed the inputs on each loan type, the loan comparison calculator will show you each loan type’s monthly payments.
- Loan Amount. Enter the total dollar amount for this loan. Using a mortgage calculator can be a useful tool to determine this amount.
- Annual Interest Rate. Enter the interest rate you will pay each year for this loan. Keep in mind that fixed-rate loans will have a fixed interest rate that remains constant over the life of your loan. Variable interest rates that come with adjustable-rate mortgages (ARMs) will remain constant during the negotiated initial period. Then, they will reset annually or semi-annually depending on your lender’s policy in alignment with market trends.
- Loan Term. This is the number of years over which you will repay your loan. Loan terms are typically issued in 15 and 30-year increments.
- Loan Amortization. If your monthly payments are made on schedule to pay off your loan on time, you don’t have to worry about this input. Loans that extend past their amortization schedule have a balloon payment, which covers the principal and interest payments extended on your loan.
- Origination Fee. The VA offers protection for eligible military service personnel by setting limits on the fees that lenders can charge. You will not be charged more than 1% of the total loan amount as an origination fee when using a VA loan. Expect to pay 0.5% to 1% of the total loan amount.
- Commitment Fee. This is a fee you are charged by your lender to compensate your lender for their commitment to lend. They are typically issued for unused credit lines or undispersed loans. Essentially, this fee is charged because your lender is unable to charge for interest. It is usually rolled into closing costs and hovers between 0.25% and 1%.
- Other Fees. Input other conventional loan fees not covered in other fields here. Use this section to input the VA funding fee to compare mortgages. If you are using the VA’s loan program for the first time, the fee is set to 2.3%. Subsequent VA loan usage sets the VA Funding fee at 3.6%; it can be reduced with a down payment of 5%.
- Closing Costs. Closing costs are typically rolled into your loan and dispersed throughout your monthly payments. It can include items such as loan origination fees, discount points, title searches, title insurance, surveys, taxes, deed recording fees, and credit report charges. The exact amount that you’ll pay in VA loan closing costs will vary based on the home you choose and the negotiated terms on your loan. Expect your closing costs to be between 3% to 5% of the total value of your loan.
- Annual Percentage Rate. Not to be confused with your annual interest rate, your annual percentage rate (APR) is the yearly rate charged for your loan. It is expressed as a percentage and attempts to calculate a “total cost” of borrowing money. APR takes into account fees such as mortgage insurance, most closing costs, discount points, and loan origination fees. Calculating your APR matters because it usually differs from advertised rates, providing you with a more accurate bottom-line comparison between loan types. Even though including your loan’s APR will give you a better estimate of your monthly payments, note that it does not include the compounding of interest within a year. APR on VA loans typically falls within a range of 3% to 3.5%.
How Can Hero Loan Help?
It’s a smart move to compare loan types before shopping on the market for a house. Using a loan comparison calculator is a good starting point when you want to see how each loan’s monthly payments will affect your spending habits. Still, a calculator cannot answer questions you have about variables that fit outside the box.
Hero Loan was designed to provide our veterans, military service members, and their families with a customized experience when it comes to getting the best deal possible on a loan. Our knowledgeable team of friendly lending Experts comes from the same communities we serve. This allows us to better cater to our clients’ needs as we can relate to what you are going through as homebuyers. We have an in-house underwriting process that makes getting your loan approved fast and painless with closing times in as little as two weeks.
Call us at 866-221-8707 so we can discuss further which loan type best suits your home buying needs. We can also be reached through our online chat service to help you find out how you can select a loan type that will get you into your dream home as soon as possible.