ARMs vs. Fixed Rate Mortgage Calculators

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By changing any value in the following form fields, calculated values are immediately provided for displayed output values. Click the view report button to see all of your results.

Financial Calculators from
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Fixed Rate Mortgage:

Monthly payment $0.00

Mortgage amount:*This entry is required.Enter an amount between $0 and $250,000,000

Term in years:*This entry is required.

Interest rate:*This entry is required.Enter an amount between 1% and 25%

Report amortization:

Report amortization

Annually

Monthly

Fully Amortizing ARM:

Initial payment $0.00

Interest only ARM:

Initial payment $0.00

**FIG_GRAPHTITLE** Column Graph: Please use the calculator's report to see detailed calculation results in tabular form.

Monthly Payment by Mortgage Type

Definitions

Fixed-Rate Mortgage

A fixed-rate mortgage has the same interest rate and monthly payment throughout the term of the mortgage.

Fully Amortizing ARM

This calculator shows a "fully amortizing" ARM, which is the most common type of ARM. The monthly payment is calculated to pay off the entire mortgage balance at the end of a 30-year term. After the initial period, the interest rate and monthly payment adjust at the frequency specified. The amount an ARM can adjust each year, and over the life of the loan, are typically capped. Below is a list of common ARMs.

Common Adjustable Rate Mortgages
ARM Type	Months Fixed
10/1 ARM	Fixed for 120 months, adjusts annually for the remaining term of the loan.
7/1 ARM	Fixed for 84 months, adjusts annually for the remaining term of the loan.
5/1 ARM	Fixed for 60 months, adjusts annually for the remaining term of the loan.
3/1 ARM	Fixed for 36 months, adjusts annually for the remaining term of the loan.
10/6 month ARM	Fixed for 120 months, adjusts every six months for the remaining term of the loan.
7/6 month ARM	Fixed for 84 months, adjusts every six months for the remaining term of the loan.
5/6 month ARM	Fixed for 60 months, adjusts every six months for the remaining term of the loan.
3/6 month ARM	Fixed for 36 months, adjusts every six months for the remaining term of the loan.

Interest Only ARM

An Interest Only ARM only requires monthly interest payments. Since you are not paying any principal, as you are with the other two types of mortgages described above, this can lower your monthly payment. However, since your mortgage's principal balance is not decreased, you will have a balloon payment at the end of the mortgage's term. Like a Fully Amortizing ARM, an Interest Only ARM will often have a period where the interest rate is fixed, and then it is adjusted annually. An Interest Only ARM will also have a maximum interest rate that it will not exceed. This calculator uses a maximum interest rate of 12%.

Mortgage amount

Original or expected balance for your mortgage.

Term in years

The number of years over which you will repay this mortgage. The most common mortgage terms are 15 years and 30 years. Please note that for the Interest Only ARM you will have a balloon payment for the entire principal balance at the end of the loan term.

Expected rate change

The annual adjustment you expect in your ARM. The range for this calculator is minus 3% to plus 3%. Use a negative value if you believe interest rates will decrease, a positive value if you believe they will increase.

Interest rate

Annual interest rate for each mortgage type. Typically an ARM will have a lower interest rate than a fixed-rate mortgage. The rate of an Interest Only ARM will vary by lender.

Months rate fixed

This is the number of months the rate is fixed for an ARM. During this period the interest rate and the monthly payment will remain fixed. The rate will then adjust annually by the expected rate change.

Months between adjustments

The number of payment periods between potential adjustments to your interest rate. The most common is 12 months, which means your payment could change at most once per year. Loans using the SOFR benchmark have six months between adjustments. The SOFR benchmark is based on what U.S. financial institutions pay each other for overnight loans. It is often used as a replacement for the LIBOR benchmark which is no longer used.

Interest rate cap

This is the maximum interest rate for this mortgage. The mortgage's interest rate will never exceed the interest rate cap.

Monthly payment

Monthly principal and interest payment (PI) for the fixed-rate Mortgage and the Fully Amortizing ARM. This is an interest only payment for an Interest Only ARM.

Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.

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