Compare two mortgage quotes

No. A lower rate is usually purchased with points paid at closing, so the cheaper monthly payment is bought with money you hand over on day one. Whether that is worth it depends entirely on how long you keep the loan. If you sell or refinance before the breakeven point, the higher rate with no points was the cheaper deal.

It is the month when the monthly savings from the lower rate have added up to the extra money you paid at closing. Before that month you are behind; after it you are ahead. Enter both quotes above and the calculator shows the exact point, along with what each option has cost you at one, three, five, seven and ten years.

APR is useful but it answers a narrower question than most people think. It folds fees into a single rate while assuming you keep the loan for its full term. Most borrowers do not — they sell or refinance long before then. For a decision about the next few years, comparing total cost at the point you expect to exit is more informative than comparing APRs.

Sometimes. Points make sense when you are confident you will hold the loan well past the breakeven point and the cash has no better use. They make less sense when rates may fall, when you might move, or when the same money would be better spent on a larger down payment to remove mortgage insurance. Better Rate does not charge points on our published rates, which is why the comparison above is worth running against any quote that does.

Ask for a Loan Estimate from each, which is a standardised federal form, and compare them on the same loan amount, term, and lock period taken on the same day. Rates move daily, so quotes gathered a week apart are not comparable. Page 2 of the Loan Estimate lists the points and lender fees this calculator asks for.