Arm Mortgage Calculator

How to Use the ARM Mortgage Calculator

This guide will walk you through using the ARM Mortgage Calculator step-by-step to estimate your payments and understand the financial implications of an adjustable-rate mortgage. Please follow the instructions carefully to ensure accurate results.

Step 1: Enter Loan Amount

• Find the field labeled Loan Amount ($).
• Enter the total loan amount you wish to borrow. This value must be between $1,000 and $100,000,000 and should be rounded to the nearest thousand.

Step 2: Enter Down Payment

• Locate the field labeled Down Payment ($).
• Input your planned down payment amount. This can be any value equal to or above $0 and should be rounded to the nearest hundred.

Step 3: Specify Initial Interest Rate

• Go to the field labeled Initial Interest Rate (%).
• Enter the initial interest rate offered by your lender. It should be a value between 0.01% and 25%, rounded to the nearest 0.125%.

Step 4: Select Loan Term

• Find the dropdown labeled Loan Term.
• Select your loan term from the available options: 15 Years or 30 Years.

Step 5: Choose Initial Fixed Period

• Navigate to the dropdown labeled Initial Fixed Period.
• Choose one of the adjustable-rate mortgage options available: 3/1 ARM, 5/1 ARM, 7/1 ARM, or 10/1 ARM.

Step 6: Define Periodic Adjustment Cap

• Locate the field titled Periodic Adjustment Cap (%).
• Input the percentage that represents the maximum your interest rate can increase in each adjustment period. This should be between 0.125% and 10%, in increments of 0.125%.

Step 7: Enter Lifetime Rate Cap

• Find the field named Lifetime Rate Cap (%).
• Enter the lifetime cap on the interest rate, indicating the maximum it can rise over the life of the loan. Ensure it is a value between 0.125% and 15%, rounded to the nearest 0.125%.

Step 8: Review Results

After filling out all input fields, the calculator will compute several important figures:

• Initial Monthly Payment: Displays your estimated monthly payment with the initial interest rate.
• Maximum Possible Monthly Payment: Shows the maximum potential monthly payment if rates increase to the lifetime cap.
• Total Payments (Initial Rate): The total amount you would pay over the loan term with the initial interest rate.
• Maximum Total Payments: The total potential payments if rates increase to the lifetime cap throughout the loan term.
• Initial Total Interest: The total of interest payments made with the initial rate.
• Maximum Possible Interest: Maximum interest you might pay if rates increase to the lifetime cap.

Utilize these results to understand the potential costs and risks of taking on an adjustable-rate mortgage, and to make informed financial decisions.