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# Comparing Two Fixed-Rate Mortgages

#### What This Calculator Does: This calculator compares the total cost of twofixed-rate purchase mortgages over a specified future period. It allows upfront costs to be financed,and an optional interest-only period at the beginning.

 Information About You and Your House Is This Loan for the Purchase of a Property or a Refinance? Purchase Refinance Expected Years in House, Cannot Exceed Term Rate of Interest on Savings  (e.g. 3.5) Income Tax Bracket ( e.g. 27 ) Current Value of House (e.g. 225000) Optional:  Expected Rate of Property Value Appreciation Loan Information Loan 1 Loan 2 Loan Amount Interest Rate on Loan  (e.g. 7.50) Term ( in months ) Optional: Number of Years Loan is Interest-Only Points  (% of Loan) — Check box if charges will be added to loan All Other Fees Paid to Lender ( \$ )  — Check box if charges will be added to loan Mortgage Insurance Information   (if applicable) Loan # 1 Loan # 2 Type of Loan Conventional   FHA Conventional   FHA Upfront Mortgage Insurance Premium  ( \$ ) — Check box if charges will be added to loan Monthly Mortgage Insurance Payment  ( \$ ) Will Mortgage Insurance be Deductible for You? Yes      No

DO NOT USE DOLLAR SIGNS (\$), COMMAS (,) PLUS SIGNS ( + )
OR PERCENTAGE SIGNS (%) IN ANY INPUT BOXES

This is your marginal tax rate, the rate at which each additional dollar of income will be taxed. If you pay only Federal income taxes, it is the highest tax bracket you used when you calculated your taxes. Federal tax brackets currently are: 10%, 15%, 25%, 28%, 33%, and 35%. If you also pay state and/or local income taxes, these marginal rates can be added to the Federal rate. For example, if you had to pay 25% to the IRS and 5% to the state of Pennsylvania, your tax bracket is 30%. To perform a "pre-tax" analysis enter zero (0) as the tax rate. The period cannot exceed the shortest mortgage term. The period may be stated in fractions. For example, 25 years and 1 month would be entered as 25.083, 25 years and two months would be 25.167, and 25 years and 3 months would be 25.25, etc. All settlement costs that might differ between any two deals. This includes all lender fees of any sort, and all third party fees (such as title insurance, apprraisals and credit report), but excluding charges of governments which cannot vary from one deal to another. Do not include escrow reserves for taxes and insurance, or prepaid (per diem) interest. Mortgage Insurance is now tax deductible if your income is \$100,000 or less for a couple, \$50,000 or less for a single person. This is the interest rate you could earn on the monies you spend during the period you are in your home. For most people, it would be the interest rate on a bank account or a money market fund. In after-tax cost comparisons, this figure is adjusted to an after-tax basis. The size of the mortgage insurance monthly premium is triggered by the down payment percentage. Mortgage insurance premiums drop significantly as the down payment crosses the 3%, 5%, 10%, 15% and 20% levels. When deciding on your down payment be sure to take this into account. Must be entered as a dollar amount. Can be entered as a positive or negative amount. If negative, any amount in excess of All Other Fees Paid to Lender will be retained by the loan provider. This is required only if your are now paying mortgage insurance. If you are paying mortgage insurance, we need to know the value of your house when the current loan was taken out so that we can figure out when the insurance payment will stop. We assume it stops when the balance reaches 80% of original value. Enter as a dollars and cents amount. Conventional and FHA mortgage insurance terminates automatically when the loan balance reaches 78% of original property value. Conventional mortgage insurance premiums drop to .20% after 10 years. FHA mortgage insurance does not drop after 10 years. If you enter a value, mortgage insurance will be terminated when the loan balance equals 80% of the appreciated value of the property after year 5, or 75% during years 2 to 5. This affects the after-tax interest cost because on a purchase transaction points are fully deductible in the first year whereas on a refinance the deduction must be spread over the life of the loan, with the remaining portion of the deduction taken in the year the loan is paid in full.