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A fixed rate mortgage has the same payment for the entire term of the loan. An adjustable rate mortgage (ARM) has a rate that can change, causing your monthly payment to increase or decrease. Use this calculator to compare a fixed rate mortgage to two types of ARMs, a Fully Amortizing ARM and an Interest Only ARM.
Definitions
Fixed Rate Mortgage
A fixed rate mortgage has the same interest rate and monthly payment throughout the term of the mortgage. The payment is calculated to payoff the mortgage balance at the end of the term. The most common terms are 15 year and 30 years.
Fully Amortizing ARM
This 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 annually. A Fully Amortizing ARM will also have a maximum rate that it will not exceed. This calculator uses a maximum interest rate of 12%. 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.
1 year ARM
Fixed for 12 months, adjusts annually 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
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.
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.
The mortgage calculators are provided by KJE Computer Solutions, LLC and made available to NUMBER1EXPERT as self-help tools for your independent use and are not intended to provide investment advice. We can't 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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People who are selling their homes should know something about the market group from which their buyers are likely to appear. Many homes are perfect for a first-time buyer. First-time buyers are making a major purchase they have never attempted before, and may be unusually subject to the inevitable stress and anxiety that goes with buying a home.
First-time home buyers are usually younger (between 25 and 34 years of age) and have distinct buying patterns. First-timers are often looking for homes that are smaller, and perhaps older, than repeat buyers. The median home size for first-time buyers is about 1450 square feet. Approximately four in ten first-timers will buy homes built before 1960, compared to two in ten repeat buyers.
First-time buyers are in the process of developing a clearly defined sense of what they want in a house. They may not have enough money to buy their ultimate dream home at first, but seventy-four percent say they like their new home better than their previous residence.
Linda Dale RE/MAX Action Realty - License number AB061668L 1126 Horsham Road Maple Glen, PA 19002 Direct: 215.646.3954 Office: 215.358.1100 Cell: 215.327.9759 Fax: 215.646.2684 Email: Linda@lindadale.com
Linda has been serving buyers and sellers of real estate for over 25 years. She enjoys the thrill of finding that first home for first-timers, and Linda also enjoys finding that "dream" home for move-up buyers. On a personal note, Linda is an avid golfer, with first-hand knowledge of this areas residential golf communities and courses. Linda's
experience will save you time and money.
Linda is ranked in the top 1% of all agents throughout the US. She also is licensed as an Associate Broker in the state of PA, with
credentials including an ABR (Accredited Buyer Representative), CLHMS (Certified Luxury HOme Marketing Specialist), CRS (Certified Residential Specialist), and a GRI (Graduate, Realtors Institute). Linda is a Temple Graduate with a business degree, specializing in Finance and Economics.
Maple Glen, PA
215.358.1100
You can find
great local
Horsham, Pennsylvania real estate information on
Localism.com Linda Dale is a proud member of the ActiveRain Real Estate
Network, a free online community to help real estate professionals grow their
business.
- NUMBER1EXPERT 
