Which loan is better?
Inputs

Loan 1Loan 2
Term (years)
Interest rate
%%
Origination Charge
$$
Charge For Specific Interest Rate
%%
Other settlement services
$$

If loans have adjustable rates
Months before first adjustment
Months between rate adjustments
Maximum rate adjustment
%%
Minimum rate
%%
Maximum rate
%%
Margin
%%
Index rate
%%
Index rate change per adjustment
%%
Months between index adjustments

Loan Amount
$
Purchase price
$
Your state + federal tax rate
%
Yearly property tax
$
Yearly property insurance
$
Years before you sell or pay off loan
Your savings rate
%

Regarding loan one

Regarding loan two

This tool helps you determine which of two mortgage loans is the better deal. The loans may both be fixed- or adjustable-rate (ARMs) loans.

Lifetime cap: A lifetime cap is the limit to how much the interest rate on an adjustable-rate loan can be increased over the term of the loan.
Property insurance: Protects the homeowner from weather-related damage, as well as potential liability from events that occur on the property.
Yield: The annual income provided by a fund, share or bond expressed as a percentage. Yield is normally calculated by dividing the current price of the asset by the income. For example, the yield on a bond that sells for $1,000 and has a coupon rate of 8% is 8%. If the bond price rises to $1,050, the yield falls to 7.62%. If the price drops to $950, the current yield rises to 8.42%. Redemption yield is the interest rate that you are getting if you buy a bond at the current price and hold it until redemption.
Index rate: An index rate is a widely used, benchmark interest rate that lenders use to set the interest rate on loans and credit cards.
Other settlement services: Fees paid for services associated with the purchase of a home that do not represent compensation to the lender and/or the broker for originating the loan.
Cost-benefit analysis: An analysis of the cost effectiveness of different alternatives in order to see whether the benefits outweigh the costs.
Treasury bills (T-bills): U.S. Treasury bills are short-term debt obligations of the U.S. Treasury. T-bills are usually issued to mature in three or six months. Prices for T-bills are stated as a discount to the par value. For example, a T-bill with a price of 99.65 is selling for 99.65% of its par value. T-bills are auctioned weekly and used to pay operations of the federal government. T-bills are considered to be among the safest and most liquid investments.
Anniversary date: The periodic date, usually once a year, that the interest rate is reset on an adjustable-rate mortgage.
Private mortgage insurance (PMI): An insurance policy that protects lenders against loss if a borrower defaults. Typically required if the loan-to-value (LTV) ratio of the home exceeds 80%.
Interest rate cap: The maximum interest rate that can be charged on an adjustable interest rate loan during the term of the loan.
Tax rates: The percentage of your taxable income that is owed to the state and federal governments. The tax rate increases as the taxable base amount increases.
Months between rate adjustments: The frequency at which interest rate changes or resets on an adjustable-rate mortgage occur.
Effective interest rate: Your true interest-rate cost of borrowing stated as an annual rate. It loan includes compounded interest, fees, points and other closing costs.
Origination Charges: The sum of all fees and charges from origination-related services. This represents all compensation to the lender and/or broker for originating the loan.
Margin: The fixed amount a lender adds to the base rate of an adjustable-rate mortgage to set the loan rate.
Interest rate floor: The minimum interest rate that can be charged on an adjustable interest rate loan during the term of the loan.
Adjustable-rate mortgage (ARM): A type of mortgage loan in which the interest rate paid on the outstanding balance varies according to a specific benchmark.
Savings interest rate: The yearly interest rate you earn on your savings.
Property tax: A tax assessed on real estate by the local government, usually based on the value of the property (including the land) you own.
Periodic rate cap: The periodic interest rate cap is the maximum amount the loan rate can change on an adjustable-rate mortgage loan on the anniversary date. ARM loan rates are often reset once a year after an initial period. A lifetime cap often exists. A lifetime cap limits the maximum loan rate that can be charged.
P+I: An acronym for the principal and interest that you pay on a mortgage loan.
Adjustment period: The initial fixed-interest-rate period on an adjustable rate mortgage loan. For example, a 5-year ARM would have an adjustment period of 60 months.
Property Taxes and Homeowner's Insurance: A typical monthly mortgage payment consists of amounts for loan principal, interest, property taxes and homeowner's insurance.
Origination fee: A lender may charge an origination fee that is additional to any mortgage points you pay. Origination fees are the lender's charge for funding your mortgage with a mortgage broker. The process of funding your loan is called origination.
Charge for specific interest rate: An additional charge, expressed as a percentage of the loan amount, to obtain a lower interest rate.
Term: The period of a loan, generally measured in years. Auto loans generally range from 2 to 5 years. Mortgage loans: 15 to 20 years.
Present value: The value of a future payment, or series of payments, discounted at the appropriate interest rate to determine the value in today's dollars.
Spread: The arithmetic difference between two interest rates, usually stated in basis points. One percentage point consists of 100 basis points.
Interest rate: The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of money.
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The Leadfusion Calculators, educational tools and content are for information purposes only and are not intended to provide investment, legal, tax, or accounting advice, nor are they intended to indicate the availability or applicability of any HSBC company, product or service to your unique circumstances. All examples are hypothetical and for illustrative purposes. Although we have obtained content from sources deemed to be reliable, HSBC and its affiliates are not responsible for any content provided by unaffiliated third parties. You may wish to consult an appropriate advisor about your unique situation.The accuracy of this calculator and its applicability to your circumstances is not guaranteed. You should obtain personal advice from qualified professionals.