Adjustable rate mortgages can provide attractive interest rates,
but your payment is not fixed. This calculator helps you to
determine what your adjustable mortgage payments may be.
Definitions
Adjustable Rate Mortgage (ARM)
This calculator shows a fully amortizing ARM which is the most
common type of ARM. The monthly payment is calculated to payoff the
entire mortgage balance at the end of the term. The term is
typically 30 years. After any fixed interest rate period has
passed, the interest rate and payment adjusts at the frequency
specified. A Fully Amortizing ARM will also have a maximum rate
that it will not exceed. Below is a list of the most common types
of Fully Amortizing 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.
Mortgage amount
Original or expected balance for your mortgage.
Starting interest rate
Initial annual interest rate for this mortgage.
Term in years
The number of years over which you will repay this loan. The
most common mortgage terms are 15 years and 30 years.
Interest rate cap
This is the highest interest rate allowed by your mortgage.
Your actual interest rate will not be adjusted above this
rate.
Months before first adjustment
This is the number of months that the interest rate is fixed.
After this period, the interest rate will be subject to rate
adjustments. If you enter zero in this field, we assume that the
rate will begin making adjustments after initial period of time
between adjustments has passed. If any number other than zero is
entered, the first adjustment will take place at that time, and
adjustments will happen at the frequency entered in the "months
between adjustments" field.
Expected adjustment
The amount you believe that your mortgage's interest rate will
change. This amount will be added to or subtracted from your
interest rate.
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.
Starting monthly payment
Monthly principal and interest payment (PI) based on your
beginning balance and starting interest rate.
Total payments
Total of all monthly payments over the full term of the
mortgage. This total payment amount assumes that there are no
prepayments of principal.
Total interest
Total of all interest paid over the full term of the mortgage.
This total interest amount assumes that there are no prepayments of
principal.
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 can not 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.
