Compare the same borrowing need
Use the same principal and consistent timing when comparing offers. Total paid includes principal, interest and entered upfront costs; a smaller loan can look cheaper simply because less was borrowed. Lower monthly payments can come with a longer term and more interest.
How the payment model works
For periodic rate r, principal P and n equal periods, the base payment is P × r / (1 − (1+r)^−n). At a zero rate it is P/n. The annual nominal rate is divided by 12, 26 or 52. Terms are converted to the nearest whole number of payment periods; no actual calendar or daily-accrual convention is modeled.
A checkable example
With no fees or extra payments, $300,000 at 6.5% over 30 years has a monthly payment of about $1,896.20. At 6% over 15 years, the payment is about $2,531.57. These are arithmetic scenarios, not current lender quotes. Taxes, insurance and other excluded costs would change cash outflow.
Fees and points
Enter the origination fee and other closing costs in dollars. Enter points as a percentage of principal, and exclude those amounts from the other fee fields to avoid counting them twice. Fees are paid upfront in this model. A point does not have a universal interest-rate reduction: enter the actual quoted rate separately.
Cash-flow rate versus lender APR
The displayed annualized rate solves for a periodic discount rate using the modeled schedule and principal less upfront fees. It includes the final smaller payment and any extra payments, so changing the planned payoff can change this scenario measure. It is not a statutory APR calculation: required fee treatment, payment dates and lender conventions can differ. Compare official Loan Estimates as well.
Review extra payments and frequency
Base monthly-equivalent payments exclude extras; the amortization schedule and total cost include them. For weekly or biweekly schedules, monthly extras are spread over 52 or 26 periods per year. The model recalculates a periodic base payment, rather than assuming accelerated half-monthly payments. Payoff time rounds up to whole months.
Understand the exclusions
Both loan-type options keep the entered rate constant. The ARM selection does not forecast resets or apply caps. No taxes, insurance, escrow, penalties, grace periods or irregular dates are included. Values are not rounded to cents at each period, so a lender schedule may differ. A favorable modeled cost is one input to a borrowing decision, not a recommendation.