ARM (Adjustable Rate Mortgage) Calculator
ARM Payment Analysis
Calculate ARM payments during fixed and adjustable periods
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ARM vs. Fixed Rate
Compare ARM savings against a fixed-rate mortgage
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Formula
Monthly Payment = P[r(1+r)^n] / [(1+r)^n − 1] | ARM compares initial-period payment at teaser rate vs. adjusted payment at expected/cap rate on remaining balance
Frequently Asked Questions
What is an ARM (Adjustable Rate Mortgage)?
An ARM has an initial fixed-rate period (3, 5, 7, or 10 years) followed by rate adjustments, usually annually. A 5/1 ARM means 5 years fixed, then adjusts every 1 year. Initial rates are lower than fixed-rate mortgages, but payments can increase after the fixed period.
When does an ARM make sense?
An ARM can make sense if you plan to sell or refinance before the fixed period ends, want a lower initial payment, or expect rates to decrease. If you plan to stay long-term and want payment stability, a fixed-rate mortgage is usually safer.
What are ARM rate caps?
ARM caps limit how much the rate can change. A typical 2/2/5 cap means: first adjustment max +2%, each subsequent adjustment max +2%, and lifetime cap +5% above the initial rate. So a 5% initial rate with a 5% lifetime cap can never exceed 10%.
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