When a lower mortgage rate still costs more

A lower note rate can come with higher upfront fees. Over a short hold, the fees can outweigh the interest you save.

Cost is not the monthly payment

The smaller payment is the lower rate. The cost of keeping that loan is the interest you pay while you hold it, plus the fees estimated from how far the APR sits above the note rate.

If you sell or refinance before those fees are earned back, the higher-rate offer with smaller fees can be the cheaper one. The comparison says which label costs less over the hold you set, and by how many dollars.

Break-even is a month count

When one offer has the lower rate and the higher fees, the tool finds the first month where that offer’s fees plus interest are no longer above the other offer. That month is the break-even.

If the fees are never covered before the loan ends, there is no break-even month. The lower payment never catches the cash you paid at the start, on these numbers.

What stays out of the gap

Taxes, insurance, PMI, and HOA are the same on both offers, so they do not decide the winner. The loan amount is the same too. You are comparing rate and fees, not two different houses.

Fees are not rolled into the balance. Paying points does not increase the principal the chart pays down.

This explains how WiseCalculator treats the numbers you type. It is not a lender’s offer and it is not advice for your loan.