Financial Calculator FAQ
Plain-language answers to common questions about mortgages, refinancing, life insurance, business taxes, and auto insurance.
Mortgage Calculator
Open calculator →What does PITI mean in a mortgage payment?
PITI stands for Principal, Interest, Taxes, and Insurance — the four components of a full monthly mortgage payment. Principal reduces your loan balance. Interest is the lender's charge for borrowing. Taxes are your property taxes collected monthly and held in escrow. Insurance includes homeowner's insurance and, if your down payment is less than 20%, PMI (private mortgage insurance).
What is PMI and when can I remove it?
Private Mortgage Insurance (PMI) protects the lender if you default. It's required when your down payment is less than 20% of the home's purchase price. PMI typically costs 0.5%–1.5% of the loan amount per year. Once your loan balance drops to 80% of the original appraised value, you can request cancellation. Lenders must automatically cancel it at 78% under the Homeowners Protection Act.
What's the difference between a 15-year and 30-year mortgage?
A 30-year mortgage has lower monthly payments but you pay significantly more interest over the life of the loan. A 15-year mortgage has higher monthly payments but you build equity faster, pay less total interest, and typically get a lower interest rate. Use the mortgage calculator to compare both side-by-side for your specific loan amount.
How does my credit score affect my mortgage rate?
Your credit score is one of the biggest factors in the interest rate you're offered. Borrowers with scores above 760 typically qualify for the best rates. Scores below 620 may have difficulty qualifying for conventional loans. A 1% difference in rate on a $300,000 loan can mean over $60,000 in additional interest over 30 years.
Refinance Calculator
Open calculator →What is a refinance break-even point?
The break-even point is how many months it takes for your monthly savings from refinancing to equal the closing costs you paid. For example, if refinancing costs $4,000 in closing costs and saves you $200/month, your break-even is 20 months. If you plan to stay in the home longer than that, refinancing likely makes financial sense.
What are typical refinancing closing costs?
Refinance closing costs typically run 2%–5% of the loan amount. Common costs include origination fees, appraisal fees, title insurance, and prepaid interest. On a $250,000 loan, expect $5,000–$12,500 in closing costs. Some lenders offer 'no-cost' refinances by rolling costs into the rate — use the calculator to compare both options.
When does refinancing not make sense?
Refinancing may not make sense if: you plan to move before the break-even point, closing costs are very high relative to your savings, you're far into your loan term (most interest is already paid), or you'd be extending your loan term significantly. Our refinance calculator shows cumulative cost comparisons to help you evaluate these scenarios.
Can I refinance if I have PMI?
Yes. If your home has appreciated and your new loan-to-value ratio is below 80%, refinancing can eliminate PMI entirely — which can add significant savings on top of any rate reduction. Factor this into your break-even calculation.
Life Insurance Calculator
Open calculator →What is the DIME method for calculating life insurance?
DIME stands for Debt, Income, Mortgage, and Education. It's a straightforward framework: add up your total debts (excluding the mortgage), multiply your annual income by the number of years your family would need support, add your remaining mortgage balance, and add estimated education costs for your children. The sum is a reasonable estimate of your coverage need.
How much life insurance do I actually need?
A common rule of thumb is 10–12x your annual income, but this varies significantly based on your debts, dependents, mortgage, and whether your spouse works. The DIME method gives a more personalized estimate. Someone with a large mortgage, young children, and a non-working spouse will need significantly more coverage than someone debt-free with grown children.
What's the difference between term and whole life insurance?
Term life insurance covers you for a set period (10, 20, or 30 years) and pays a death benefit if you die during that term. It's straightforward and typically much cheaper. Whole life insurance is permanent, builds cash value over time, and costs significantly more. Most financial advisors recommend term life for pure income replacement needs.
Does my employer-provided life insurance count toward my coverage?
It counts, but with a caveat — employer life insurance typically ends when you leave the job. Group coverage is usually 1–2x your annual salary, which is rarely sufficient for full income replacement. It's generally best to have your own individual policy that isn't tied to your employment.
LLC Tax Estimator
Open calculator →What is self-employment tax and why is it so high?
Self-employment (SE) tax is the equivalent of payroll taxes (Social Security + Medicare) that employees split with their employer. Employees pay 7.65% and their employer pays 7.65%. Self-employed individuals pay both halves — 15.3% — up to the Social Security wage cap ($168,600 in 2024), then 2.9% above that. This is why entity structure matters so much for business owners.
How does an S-Corp save on self-employment taxes?
An S-Corp allows the business owner to split their income into a 'reasonable salary' (subject to payroll taxes) and 'distributions' (not subject to self-employment tax). For example, if you earn $120,000 and pay yourself a $60,000 salary, only the $60,000 is subject to SE tax — saving roughly $9,000+ per year. This benefit typically outweighs S-Corp administrative costs when net profit exceeds ~$40,000–$50,000.
Is a single-member LLC taxed differently than a sole proprietorship?
By default, no. A single-member LLC is a 'disregarded entity' — the IRS treats it exactly like a sole proprietorship for tax purposes. All profits flow to your personal return and are subject to self-employment tax. The LLC provides legal liability protection but no tax difference unless you elect S-Corp or C-Corp tax treatment.
What is the qualified business income (QBI) deduction?
The QBI deduction (Section 199A) allows eligible self-employed individuals and pass-through business owners to deduct up to 20% of qualified business income from their taxable income. It's subject to income limits and restrictions based on business type. This deduction significantly reduces the effective tax rate for many small business owners and is factored into our LLC tax estimator.
Auto Insurance Estimator
Open calculator →What factors affect my car insurance premium the most?
The biggest factors are: your state (rates vary dramatically by location), your driving record (accidents and violations can raise rates 20%–50%), your age (drivers under 25 and over 75 pay more), your vehicle (make, model, age, and safety ratings), your coverage level (liability-only vs. full coverage), and your annual mileage. Credit score is also a major factor in most states.
What's the difference between liability and full coverage auto insurance?
Liability insurance covers damage you cause to other people and their property — it's legally required in most states. Full coverage adds collision (damage to your own car from accidents) and comprehensive (damage from theft, weather, fire, etc.). Full coverage makes the most sense for newer or more valuable vehicles. For older vehicles worth less than $4,000–$5,000, the premiums may not be worth it.
How can I lower my car insurance premium?
Common strategies: raise your deductible (higher deductible = lower premium), bundle with homeowner's or renter's insurance, maintain a clean driving record, ask about low-mileage discounts, take a defensive driving course, improve your credit score, and shop multiple insurers annually. Rates vary significantly between insurers for the same driver.
Why do auto insurance rates vary so much by state?
State rates reflect local factors including: required minimum coverage levels, frequency and cost of accident claims, medical cost levels, fraud rates, weather and road conditions, litigation environment, and state insurance regulations. Michigan and Florida historically have some of the highest rates; Ohio, Vermont, and Idaho tend to be among the lowest.