Mortgage Comparison and Visualization Tool

Consumers who are considering getting a mortgage or refinancing an existing one sometimes have difficulties in determining how much the full mortgage (principal and interest) will cost during its lifetime. This tool will allow the user to:

• Easily compare the full cost of two mortgages
• Visualize the difference in these costs
• Visually compare the differences in key mortgage data

To illustrate the problem that consumers have in comparing mortgages, which of the following two mortgages both with a principal of $100,000 do you think results in the lowest total payments at the end of its life?

Mortgage A:

• Annual Interest Rate: 10%
• Length of mortgage: 10 years

Mortgage B:

• Annual Interest Rate: 5%
• Length of mortgage: 20 years

Mortgage A Total Payment

P<-100000;I<-10;L<-10;R<-I/(100*12)
R<-I/(100*12);Pmt<-P*R/(1-(1+R)^(-L* 12))
TotalPmtA<-Pmt*L*12;TotalPmtA

[1] 158580.9

Mortgage B Total Payment

P<-100000;I<-5;L<-20;R<-I/(100*12)
R<-I/(100*12);Pmt<-P*R/(1-(1+R)^(-L* 12))
TotalPmtB<-Pmt*L*12;TotalPmtB

[1] 158389.4

Despite Mortage A being half the length of Mortgage B, the fact that the interest rate of A is twice that of B results in it being slightly more expensive overall, costing $191.51 more.

With this in mind, you should now explore the Mortgage Comparison and Visualization Tool.

Thanks!