Guides
Guides
Plain-English explanations of the rules behind the calculators — what the numbers mean, which figures are excluded, and where the answers come from.
Home
Buying, refinancing, and everything that comes with a mortgage.
Are discount points worth paying for?
A point costs 1% of the loan and buys a lower rate for as long as you keep it. Here is how to work out the break-even, why the answer changes if you refinance, and the tax rule that treats purchase points and refinance points completely differently.
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Do extra mortgage payments actually save money?
Yes, and far more than most people expect — but only if the timing is right and the servicer applies the money where you think. Here is what an extra $200 a month is actually worth, and why the same $200 later is worth a fifth as much.
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Does waiting for rates to drop actually save you money?
A lower rate is worth a lot, but prices do not stand still while you wait. Here is exactly how much a house can appreciate before a rate cut stops helping — and the asymmetry that decides the question.
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How do you compare two mortgage quotes?
The Loan Estimate is a standardized form for exactly this, and most people compare the wrong box on it. Here is which numbers to line up, and the tolerance rules that tell you which quoted costs are promises and which are guesses.
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How much house can you actually afford?
What a lender will approve and what you can comfortably carry are two different numbers. Here is how the approval is actually calculated — including why the 43% rule everyone quotes is no longer the legal test.
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Is a VA loan better than a conventional loan?
The real comparison is a one-time funding fee against monthly mortgage insurance that eventually stops. Here are the actual fee tiers, who pays nothing at all, and the point where the conventional loan catches up.
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Is it better to pay off your house or invest the difference?
A mortgage is the cheapest money most people will ever borrow, which argues for keeping it. It is also a guaranteed return, which argues for killing it. Here is how the comparison actually resolves.
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Is it cheaper to rent or buy right now?
Comparing rent to a mortgage payment is the wrong comparison. Here are the costs that never appear in a payment, why the answer is a break-even year rather than a yes or no, and the tax rule that decides what you keep on the way out.
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Is it worth saving longer for a bigger down payment?
Twenty percent avoids mortgage insurance, and that is worth real money. Whether it is worth waiting three years for depends on what the insurance actually costs, when it stops, and one FHA rule that changes the answer entirely.
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Should I refinance to pay off credit card debt?
Trading a 24% card rate for a 7% mortgage rate looks obvious. The arithmetic that decides it is the blended rate and the schedule, and there is a tax rule most borrowers get backwards.
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Should you pay off a debt or invest?
Paying down a loan returns exactly its interest rate, guaranteed. Investing might do better. Here is how to compare them honestly — after tax, after the match, and after admitting which number is a forecast.
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Should you sell your house before buying the next one?
One order leaves you homeless for a while, the other leaves you carrying two payments. Here is what each path actually costs, and the tax rule that punishes moving twice in quick succession.
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What is the VA's 36-month recoupment rule?
The VA requires a streamline refinance to pay back its own closing costs within 36 months. Here is what counts toward that math, what is left out, and the two seasoning clocks you have to clear first.
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What's actually in a mortgage payment?
A mortgage payment is four separate bills collected as one, and sometimes a fifth. Here is what each part is, which ones move after closing, and the rule that decides when the fifth one stops.
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When does refinancing actually pay for itself?
Break-even is the first question and the easiest one. Here is how to calculate it, what it leaves out, why a lower payment is not the same as saving money, and the disclosure that lets you compare lenders properly.
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Debt
Paying down what you owe, and what it is really costing you.
Does debt consolidation actually save money?
One payment instead of five is easier to live with. Whether it is cheaper depends on the rate after the fee, the term, and which debts you roll in — and the fee is usually taken out of what you receive.
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Is a 0% balance transfer worth the fee?
The fee is charged up front and the new rate takes over the day the promotion ends. Here is the break-even, two federal rules that protect you more than most people realize, and the one that does not.
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Should you use home equity to pay off credit cards?
A HELOC can cut a 25% rate to single digits. What it costs depends far more on how you repay it than on the rate — and the interest-only draw period is where most of the money goes missing.
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Snowball or avalanche: which actually clears debt faster?
The avalanche always costs less. The snowball is the one more people finish. Here is how big the gap usually is, why minimum payments make both look better than doing nothing, and how to pick.
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What interest rate are you really paying?
The rate on the offer sheet is not what the loan costs. Fees paid up front raise the real rate, the shorter you hold the loan the worse it gets — and the lender's own APR legally leaves several of your costs out.
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Which student loan repayment plan should you choose?
The plans available to you now depend on when your loans were first disbursed. Here is what RAP actually does, how it differs from IBR, and why the lowest payment and the lowest cost are almost never the same plan.
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Money
Growing your savings and planning for what comes next.
Are you on track for retirement?
The honest answer needs four numbers, and most people can only name two of them. Here is what a retirement target is actually built from, and the assumptions that move it most.
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How big should an emergency fund be?
Three to six months — but of what? The unit is the part people get wrong, and getting it wrong in either direction is expensive. Here is the rule, what it is measured in, and where the money should sit.
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How do you calculate your net worth?
Everything you own minus everything you owe. The arithmetic takes a minute; the judgment calls are what make the number useful or misleading.
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How does compound interest actually work?
Interest on interest, and why the curve bends late. The short version of a short subject, with the one number that shows why starting early beats saving more.
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Lump sum or dollar-cost averaging: which wins?
Investing it all at once usually finishes ahead, for a reason that has nothing to do with market timing. Here is why, when the reverse is true, and what you are actually buying when you spread it out.
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Roth or traditional: which is right for you?
The usual framing is a bet on future tax rates, which nobody can win. The stronger argument is about the contribution limit, and it is the one most comparisons never make.
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Should you reinvest dividends or take the cash?
Reinvesting compounds the income, which is usually right while you are building. The part that catches people is the tax bill that arrives whether you took the cash or not — and the cost basis nobody tracks.
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Should you take the 401(k) match or pay down debt?
This is the rare question in personal finance with a genuinely settled answer. Here is the arithmetic behind it, and where the real decision starts once the match is captured.
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What does a savings account really earn?
The rate is only part of it. Here is why APY is the number to compare, what inflation does to the answer, and the difference between the account being safe and the money keeping its value.
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What does withdrawing from retirement early actually cost?
The 10% penalty is the part everyone knows and the smallest part of the bill. Here is how the tax is actually computed, why withholding is not the tax, and the cost that never appears on any statement.
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What return do you need to hit your goal?
Work backwards from the goal and you get a required return. Whether that number is reasonable depends entirely on what the asset classes have actually delivered — which is a measurement, not an opinion.
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What will you owe in capital gains tax?
Long-term capital gains rates are bracketed, not flat — and the gain itself decides which bracket it lands in. Here are the bands, the surtax that sits on top, and the holding period that changes everything.
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What will your investments actually be worth?
A projection is an assumption with a calculator attached. Here is what the assumptions do, why a single percentage point of fees costs so much more than it sounds, and the risk that averages hide.
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Auto
What a car really costs, from the lot to the day you sell it.
Do electric cars actually save money?
Fuel and maintenance are genuinely cheaper. Depreciation has been worse, and the federal credits have ended. Here is what the comparison looks like now that the incentive is gone.
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How fast does a car lose value?
Steeply at first, then more slowly — and the loan does not follow the same shape. Here is where the two lines cross, how long a typical new car spends underwater, and why nobody notices the largest cost of owning one.
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How is a lease payment calculated?
Three numbers produce a lease payment, and the dealer controls all three. Here is the formula, how to convert a money factor into a rate, and why rolling negative equity into a lease costs more than the amount you rolled in.
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How much car can you actually afford?
A lender's maximum and a sensible budget are different numbers. Here is what the 20/4/10 rule actually says, why the payment is the wrong thing to shop for, and what a trade-in you still owe on does to the answer.
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Is leasing or buying a car cheaper?
Leasing has the lower payment and buying has the lower cost, in almost every case. Here is why, what a lease actually charges you for, and the maintenance myth that makes the comparison look closer than it is.
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Is refinancing a car loan worth it?
The saving is real when your rate or your credit has moved. The two things that quietly undo it are a longer term and rolled-in fees — and rolled-in fees are worse on a car than on a house.
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New or used: which is the better buy?
The price gap is not the saving. The saving is the depreciation someone else already absorbed — set against a higher rate, more repairs and a shorter remaining life.
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Should you finance a car or pay cash?
Paying cash saves the interest. Financing keeps the money invested. The answer usually turns on a detail nobody mentions: the rebate and the promotional rate are normally alternatives, not additions.
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What does a car really cost to own?
The payment is the smallest part of the answer. Here is the full list, which line is largest, and why the biggest cost of owning a car is the one that never sends an invoice.
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