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Mortgage Calculator: ARM Payment Calculator

The introductory interest rates associated with adjustable rate mortgage (ARM) loans can be attractive. However, it is important to note that the interest rates are not fixed and will fluctuate over time.

Since the interest rates for ARMs are not fixed, the monthly payment amount can change over the life of the loan. Mortgage shoppers who are considering an adjustable rate mortgage should review the numbers on the Mortgage Marvel ARM Payment Mortgage Calculator prior to making a decision. The ARM payment mortgage calculator can help home buyers understand the numbers.

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Adjustable Rate Mortgage (ARM)

An ARM (adjustable rate mortgage) is a loan type that allows the lender to adjust the interest rate during the term of the loan. Generally, these changes are determined by a margin and an index so that the interest rate changes (up or down) are based on market conditions at the time of the change. Most often a rate change cap and a lifetime cap limit these interest rate changes. Consumers who apply for adjustable rate mortgages are entitled to ARM Program Disclosures from the lender that spell out the terms of the loan.

Mortgage Marvel mortgage calculators will show a fully-amortizing ARM, the most common type of ARM, where the monthly payment is sufficient to payoff the entire mortgage balance at the end of the term. The term is typically 30 years. After any initial, fixed interest rate period has passed, the interest rate and payment adjust at the frequency specified. 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.

Mortgage Amount
In relation to the Mortgage Marvel mortgage calculator, this amount reflects the original or expected balance of a mortgage.

Starting Interest Rate
The initial annual interest rate charged for a particular adjustable rate mortgage.

Term in Years
The number of years it will take to repay a home loan. The most common mortgage loan term lengths are 30 years and 15 years. For balloon mortgages, most common terms are 5 years and 7 years and after that time period concludes individuals will need to either refinance or pay off the remaining balance. For interest only loans, consumers will have a balloon payment for the entire principal balance at the end of the loan term.

Interest Rate Cap
This is the highest interest rate allowed by a mortgage. The actual interest rate charged cannot be adjusted above this limit.

Months Before First Adjustment Date
In relation to an adjustable rate mortgage, this number reflects the months that the interest rate is fixed. After this period, the interest rate will be subject to rate adjustments. If a zero is entered in this field, Mortgage Marvel will assume that the rate will begin making adjustments after the 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 that an individual believes that their ARM interest rate will change during an adjustment period . This amount will be added to or subtracted from an interest rate on the Mortgage Marvel mortgage calculator.

Months Between Adjustments
The number of payment periods between potential adjustments to an interest rate associated with an ARM. The most common length of time is 12 months, meaning payments could change a maximum of once per year.

Starting Monthly Payment
Monthly principal and interest payment (P&I) based on a beginning balance and starting interest rate in relation to an ARM.

Total Payments
The total of all monthly payments over the full term of the mortgage. In regards to this loan calculator, the total payment amount assumes that there are no prepayments of principal.

Total Interest
The total of all interest paid over the full term of the mortgage. In relation to a loan calculator, 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.