Loan Pricing Analysis
Use the Loan Pricing Analysis Tool by LoanmindSM to compare loan pricing scenarios side by side using the Time-Adjusted Annual Cost Rate — an annualized rate that reflects the actual cost of each option based on how long you expect to keep the loan.
| TIME-ADJUSTED ANNUAL COST RATE | BEFORE-TAX | |||
|---|---|---|---|
| Analysis Point LIFE OF LOAN |
Pricing A | Pricing B | Pricing C |
Comparing mortgage pricing options using the Time-Adjusted Annual Cost Rate.
When a lender presents you with mortgage pricing options — pay points for a lower rate, take a lender credit in exchange for a higher rate, or anything in between — how do you know which option actually costs you less? The Loan Pricing Analysis Tool by LoanmindSM answers that question with the Time-Adjusted Annual Cost Rate — an annualized rate calculated at the point in time you actually expect to hold the loan.
Your APR is a standardized, federally regulated figure that reflects the cost of a loan if held for its entire term — it's a genuinely useful, accurate benchmark for comparing loans on equal footing. But most borrowers refinance or sell well before a 30-year loan matures, and APR isn't designed to account for that. Because APR spreads upfront costs over the full loan life, it doesn't show how the timing of a sale or refinance changes which pricing option actually costs less.
The Time-Adjusted Annual Cost Rate fills that gap — recalculating the annualized cost of each pricing option at the point in time you actually expect to hold the loan, not just at the full term.
Key principle. The most cost-effective pricing option depends entirely on how long you hold the loan. A pricing structure that looks attractive over 30 years may be the most expensive option over 5 years — and vice versa. The Time-Adjusted Annual Cost Rate makes this visible at every time horizon.
The Time-Adjusted Annual Cost Rate is a single annualized rate that incorporates all loan-related costs into one comparable figure: the interest rate, discount points paid, lender credits received, and all other loan-related closing costs. It's calculated at each year of the loan's life, so you can see exactly how the annualized cost of each pricing option evolves over time and identify the point where one option becomes more or less favorable than another. The tool also displays the cumulative dollar cost of each option alongside the rate, for a complete picture at every time horizon.
The tool lets you model up to three pricing scenarios simultaneously — each with its own interest rate, points, and lender credit — and compares them across a common set of loan details. A typical comparison might include:
The comparison table displays all three side by side, year by year, so the optimal pricing choice for your expected hold period is immediately apparent.
The before-tax Time-Adjusted Annual Cost Rate reflects the raw cost of each pricing option. Entering your ordinary income tax rate unlocks the after-tax view, which accounts for the deductibility of mortgage interest and — where applicable — the deductibility of discount points paid at closing. Both are subject to the TCJA $750,000 loan balance cap. For itemizing borrowers, the after-tax rate can shift the comparison meaningfully, particularly when points are involved.
Results are estimates for educational and informational purposes only and are not financial, tax, or legal advice. Individual circumstances vary; please consult a qualified financial advisor before making mortgage financing decisions. Loan Pricing Analysis · Time-Adjusted Annual Cost Rate — by LoanmindSM.
