ARM Mortgage Calculator - Adjustable Rate Mortgage Calculator
This ARM mortgage calculator compares an adjustable rate mortgage to a fixed rate mortgage (side-by-side) so you can make a smart loan decision.
It assumes interest rates will be increased on the ARM at the maximum allowed rate providing you with the most conservative outlook. It also includes a printable comparison page with complete amortization schedule for handy reference.
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Adjustable-Rate Mortgages Vs. Fixed-Rate Mortgages
Everyone wants a low interest rate.
Some interest rates, though, seem too good to be true.
If you’re skeptical about certain advertised interest rates, it’s smart to follow through on your gut feeling and dig deeper into the terms of the loan. You might find that those low interest rate loans are adjustable-rate mortgages.
The reality is adjustable-rate mortgages (ARMs) are not inherently bad. They have their pros and cons, so how do you know which type of loan is right for you?
Compare ARMs side-by-side with fixed-rate mortgages and use our ARM Mortgage Calculator. Quickly discover the maximum monthly payment, total interest, and more information for each type of mortgage. When you’re done, print out a comparison report and amortization schedule.
Below is more information about adjustable-rate mortgages so that you can make the best choice for your financial situation . . . .
What Is An Adjustable-Rate Mortgage?
An adjustable rate mortgage is a mortgage where the interest rate rises and falls to reflect market conditions. They are designed to transfer the interest rate risk from the lender to the borrower.
If market interest rates (the cost to the lender when borrowing in the credit markets) change, the lender will pass that interest rate change on to all their adjustable rate mortgage holders at predetermined intervals (usually once per year) by a pre-approved percentage.
ARMs have several unique features that are important to understand:
Additionally, ARMs can have special conditions such as initial discounts, negative amortization when mortgage payments are too small and there’s not enough money to pay the interest at the beginning of the loan, future conversion to fixed-rate mortgage requirements, or prepayment requirements.
Some of these features can be desirable, but not all. Let’s take a closer look at more specific adjustable-rate mortgage pros and cons.
Adjustable-Rate Mortgage Pros And Cons
Adjustable-rate mortgages have their share of advantages and disadvantages. Consider the following:
Adjustable-rate mortgages aren’t necessarily bad, but they have specific characteristics that make them only appropriate under certain conditions. They are not for everyone. Before making a decision, it is important to do your research and compare loan options so you can make a fully informed decision.
Just like any other long-term loan, plan for the future. If you are looking at living in the home for a short period of time, an adjustable-rate mortgage may be the best option for you. But if you are planning to live in the home for a longer period of time, you may be better off with a fixed-rate mortgage.
Use this ARM Mortgage Calculator to begin your research process today!
ARM Mortgage Calculator Terms & Definitions
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