Welcome > Resources > Mortgage Calculators > Fixed or Adjustable Rate ...

Fixed or Adjustable Rate?

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.

"A model of how the Internet can facilitate the process of deciding where to send your children to school" - America's Best School Profiles by The Heritage Foundation California Public, Private and Charter Schools: Compare them using these top-rated, comprehensive reports.   Schools in Sonoma County, Sonoma Valley and Sonoma

Closing or Settlement >Final Arrangements Some homebuyers approach the final days of the home sale transaction with great enthusiasm, feeling utterly confident that the end is in sight, and feeling completely organized about the move. They have accounted for every detail, contacting the moving company, arranging for the transfer of their telephone, electric, water, and gas accounts and having the home professionally cleaned. They start checking off the days until the closing on their calendar. But in reality, the closing may not be entirely predictable. It is very useful for homebuyers (and sellers) to remember that closing dates are not set in stone. Lenders, appraisers, title attorneys, credit check services, and anyone else who is involved in the transactions can potentially cause a delay in the closing. If buyers keep this in mind while making arrangements, they can minimize the possible cost and inconveniences due to a delay. As the closing approaches, the real estate agent will stay on top of the situation and keep in touch with everyone involved in the transaction to prevent any unnecessary delays. See All Tips In The "Closing or Settlement" Category > See Complete Library Of Hundreds Of Tips In 30+ Categories >

Q  What is the longest construction time for a private residence? A  The Winchester House in San Jose, CA, was under construction for over 38 years. See More Real Estate Trivia >

Pat and Norm Brown Frank Howard Allen Realtors 470 First Street East Sonoma, CA. 95476 707-939-2043 707-939-2505 707-484-7159 Fax: 707-939-2044 Email: pat-brown@NUMBER1EXPERT.com Pat Brown is one of America's NUMBER1EXPERTS™ in the Sonoma area. Since obtaining her California Real Estate License in 1989, she was awarded Sales Person of the Year in 1991 for Keegan & Coppin Co. Sonoma office, was the Frank Howard Allen Realtors Wine Country Group #1 "Top Producer" for five consecutive years (1996-2000),and received the Chairman's Circle of Excellence distinction for top production between 1999 and 2005 from that same company. Pat says that her my real job satisfaction comes from helping people buy and sell their homes..."I care about people, I work hard, I get results, and I help my clients have a little fun throughout the process of buying or selling a home." Independently Owned and Operated www.pat-brown.com is brought to you by Pat and Norm Brown NUMBER1EXPERT in real estate for Sonoma County, Sonoma Valley and Sonoma, California Read our Privacy Guarantee, Terms of Service, and Free & Without Obligation Pledge

NUMBER1EXPERT®
© Best Image Marketing and/or its clients.
All rights reserved. All information deemed reliable but not guaranteed.