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Adjustable Rate Mortgage Calculator
FREEandCLEAR Find Your Mortgage

Calculate an Adjustable Rate Mortgage and Connect with Top Lenders

Use the FREEandCLEAR Adjustable Rate Mortgage (ARM) Calculator to determine your initial mortgage payment, potential future payments and worst case scenario for an adjustable rate mortgage (ARM).  When you submit your information we connect you with up to four leading lenders so that you can confirm your mortgage terms and compare multiple proposals to find the mortgage that is right for you.  We also offer a version of this calculator that does not require personal information

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When you provide valid personal info we may connect you with lenders which enables you to compare mortgage proposals and find the mortgage that is right for you. Click here for a version of this calculator that does not require personal info
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Outputs
Your monthly mortgage payment during the initial fixed rate period of the mortgage
 
Current Fully-Indexed Rate Scenario
 
Current fully-indexed rate based on the current value of the ARM index and margin. This is the value of the fully-indexed rate today, the value of the fully-indexed interest will likely change in the future
 
Initial mortgage payment during the adjustable rate period of the mortgage. Calculated based on the current fully-indexed rate
 
Total interest expense over the term of the mortgage based on using the current fully-indexed rate to calculatethe monthly mortgage payment throughout the entire adjustable rate period of the mortgage
 
Worst Case Scenario
 
The maximum interest rate possible at the beginning of the adjustable rate period
 
Initial mortgage payment during the adjustable rate period of the mortgage; calculated based on the maximum interest rate possible at the beginning of the adjustable rate period
 
The maximum possible interest rate over the life of the mortgage. Determined by the life cap of the mortgage
 
The first month when the maximum possible interest rate can be used to calculate the monthly mortgage payment. Determined by adjustment cap and life cap
 
Monthly mortgage payment based on the maximum possible interest rate over the life of the mortgage and the mortgage balance at that time
 
The worst case scenario -- total interest expense over the term of the mortgage calculated based on reaching the maximum interest rate as soon as possible
 
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Loan Program:  
Monthly Payment:  
APR:  
Rate:  
Points  More Info:
Points: Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
 
Total Lender Fees:  
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Date Submitted:  
Monthly Housing Payments
P & I More Info
Principal & Interest: A periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to the reduction of the principal balance.
Mortgage Insurance More Info
Mortgage Insurance: The monthly cost for a policy that protects the lender in case you’re unable to repay the full amount of the loan. It is typically required for loans that have a loan-to-value ratio between 80% to 100%.
(Estimated)
Property Tax More Info
Property Tax: (Also called "Real Estate Tax.") Property taxes are government assessments on real estate property. With mortgage financing, the local, county or state tax assessment on real estate property is considered part of the monthly housing obligation and typically collected and set aside by the lender ...
(Estimated)
Homeowner Insurance More Info
Homeowner Insurance: or also commonly called hazard insurance, is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one’s home, its contents, loss of its use, or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.lender ...
(Estimated)
Homeowner Association Fee More Info
Homeowner Association fee: (HOA) fees are funds that are collected from homeowners in a condominium complex to obtain the income needed to pay (typically) for master insurance, exterior and interior (as appropriate) maintenance, landscaping, water, sewer, and garbage costs.
(If Any)
Total Monthly Housing Payments
Lender Fees
Points More Info
Points Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
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Origination Charge: A loan origination charge is a fee charged by the lender for evaluating, processing, and closing the loan.
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Credit Report Fee: Fee charged to obtain an applicant’s credit history prepared by one or all of the three major credit bureaus. Used by lender to determine the borrower’s creditworthiness.
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Tax Service Fee: A fee charged by the lender to cover the cost of retaining a tax service agency. These agencies monitor the property tax payments on the property and report the results to the lender.
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Processing Fee: A processing fee is a charge by the lender for clerical items associated with the loan. Examples of processing include loan set up, organization of loan conditions for underwriting, and preparing required disclosures for the borrower.
Underwriting Fee More Info
Underwriting Fee: A fee charged by the lender to verify information on the loan application, authenticate the property’s value, and perform a risk analysis on the overall loan package.
Wire Transfer Fee More Info
Wire Transfer Fee: In most cases lenders wire funds to escrow companies to fund a loan. Commercial banks that perform this function will charge the lender so the fee is generally passed on to the borrower.
(If Any)
FHA Upfront Premium More Info
FHA Upfront Premium: A fee paid in cash at the close of escrow or more commonly it is financed into the loan. These premiums are pooled together by the FHA and are used to insure the risk of borrower default on FHA loans. FHA upfront premiums are prorated over a five year period, meaning should the homeowner refinance or sell during the first five years of the loan, they are entitled to a partial refund of the FHA upfront premium paid at loan inception.
(If any)
VA funding Fee (If any)
Flood Fee
Other Fees More Info

Other fees could be either additional Administrative Fees that a lender charges or it could be a Flat Fee to cover all lender charges such as: (Origination Fees, Points, Underwriting and Processing Fees, Credit Reports and Tax Service Fees)

The flat fee does not include prepaid items and third party costs such as appraisal fees, recording fees, prepaid interest, property & transfer taxes, homeowners insurance, borrower’s attorney’s fees, private mortgage insurance premiums (if applicable), survey costs, title insurance and related services.

Total Lender Fees
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Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Click here for more information on rates and product details.
While we pride ourselves on the quality and breadth of the FREEandCLEAR mortgage calculators please note that they should be used for informational purposes only. Our calculators rely on assumptions by us and inputs and assumptions provided by you, which may be inaccurate. The outputs from our calculators are estimates only and should not be used as the sole basis for making any financial decisions. Always consult multiple financial professionals when determining the mortgage size and program that is appropriate for you.

What Borrowers Should Know About Adjustable Rate Mortgages (ARMs)

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Adjustable Rate Mortgage Basics

With an adjustable rate mortgage (ARM) your interest rate and monthly payment are fixed for the first one, three, five, seven or ten years of the loan and then subject to change and potentially increase annually or semi-annually over the remainder of the loan term.  ARMs are often referred to as 3/1, 5/1, 7/1 or 10/1 ARMs with the first number indicating the length of the initial fixed rate period and the second number indicating how frequently the interest rate can change during the adjustable rate period.  For example, with a 7/1 ARM, the interest rate and monthly mortgage payment are fixed for the first seven years of the loan and then subject to change on an annual basis for the remaining 23 years of the mortgage.  Most adjustable rate mortgages have 30 year loan terms.       

2

The Interest Rate for an Adjustable Rate Mortgage

The interest rate for an adjustable rate mortgage during the initial fixed rate period is set by the lender based on market conditions and negotiations with the borrower.  The interest rate during the adjustable rate period is called the fully-index rate and is determined by adding the ARM index to the ARM margin.  The ARM margin is a set interest rate, usually between between 2.0% and 3.0%, that does not change over the course of your mortgage.  The ARM index is an underlying interest rate, such as LIBOR or the treasury rate, that fluctuates based on economic factors.  Because you add the index to the margin to determine your mortgage rate, if the ARM index increases, your mortgage rate increases but if the index decreases, your rate goes down.  The fully-indexed rate is used to calculate your monthly mortgage payment for an ARM so an increase in that rate increases your payment.  ARMs use adjustment caps that limit the increase in interest rate at the first adjustment period, subsequent adjustment periods and over the life of the mortgage.  The life cap for an adjustable rate mortgage is usually 5.0%, so if your initial interest rate is 2.750%, the maximum interest rate you could pay over the life of the loan is 7.750%.  

3

Advantages of an Adjustable Rate Mortgage

Advantages of an ARM include a lower initial interest rate as compared to a fixed rate mortgage and lower initial monthly mortgage payment.  The lower initial payment and interest rate also mean that borrowers can typically afford a larger mortgage with an ARM.  Adjustable rate mortgages can also be a good option for borrowers in a high interest rate environment if you think mortgage rates will go down in the future.  In that scenario you pay a lower interest rate initially and then you benefit further when your interest rate and payment decline if rates drop in the future.  Predicting interest rates is highly challenging and exposes borrowers to significant risk.

4

Disadvantages of an Adjustable Rate Mortgage

Disadvantages of an adjustable rate mortgage include the possibility that your mortgage rate and monthly payment spike in the future.  With some ARMs your interest rate can increase by 50% or more at any adjustment period which would cause your mortgage payment to increase significantly.  In general, ARMs are better suited for borrowers with a higher tolerance for risk or who are going to own their home for a shorter period of time (less than the length of the fixed rate period of the loan).  Borrowers who value peace of mind and certainty should avoid the potential payment shock associated with an ARM.

More FREEandCLEAR Mortgage Resources

Mortgage Guides

How an Adjustable Rate Mortgage (ARM) Works

Review our in-depth explanation of how an adjustable rate mortgage works including key terminology, borrowers benefits as well as informative charts and examples

Resources

Downside of an Adjustable Rate Mortgage (ARM)

Understand the risks of an adjustable rate mortgage (ARM) including potential payment shock if interest rates spike

Programs

What Mortgage Program is Right for Me?

Review the pros and cons of adjustable rate, fixed rate and interest only mortgages to determine the mortgage program that is right for you

Resources

Adjustable Rate Mortgage Rates

Review adjustable rate mortgage rates in your area based on initial interest rate, discount points, credit score and other inputs.  Comparing ARM mortgage rates from multiple lenders enables you to find the mortgage with the best terms 

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FREEandCLEAR.comYour mortgage quote request has been sent to our lending partners and you should receive emails from multiple lenders shortly
FREEandCLEAR.comComparing proposals from multiple lenders is the best way to save money on your mortgage!
By clicking "GET FREE QUOTES," you authorize selected lenders and FREEandCLEAR to contact you using the information you provided. This authorization overrides any previous registrations on federal, state, or private Do Not Call registries or any private solicitation preference you previously expressed. You agree that lenders may use automatic dialing systems to make calls to any phone number entered, even to a cell phone or other service for which the called party is charged. You understand that consent is not a condition of purchase.