Fixed vs. Adjustable Rate Mortgage

How To Decide Between a Fixed and Adjustable Rate

Weighing the pros and cons of a fixed rate mortgage vs. adjustable rate mortgage (ARM) can be complicated. To compare these options, factor in the length of the loan, when and how often adjustments occur, which index the lender will use, plus any assumptions about future interest rates. This calculator will make the process simple and walk you thru running the numbers.

Choose the length of time you expect to stay or when you might be ready to refinance.

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The final price you expect to pay for the home.

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You can enter any number or percentage. Some programs allow down payments as low as 3%. Just remember, the more you put down, the less your payment will be.

CALCULATE

Choose the length of the loan term you plan to use. Standard loan terms are 15 or 30 years.

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Enter the annual interest rate for a fixed rate mortgage.

CALCULATE

Choose the length of the loan term you plan to use. Standard loan terms are 15 or 30 years.

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Enter the initial annual interest rate for the adjustable rate mortgage.

Months

Enter the number of months (1-360) before the first rate adjustment is applied. For instance, 5 years would correspond to 60 months.

Months

Enter the number of months (1-480) between each subsequent rate adjustment. For instance, 1 year would correspond to 12 months.

Do you anticipate rates will increase, decrease or stay the same over the life of the loan?

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The maximum amount the mortgage interest rate may increase with each adjustment.

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The lowest interest rate that can be applied during the life of the loan.

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The highest interest rate that can be applied during the life of the loan.

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A fixed percentage rate that is added to the index value to determine the fully-indexed interest rate.

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The benchmark interest rate that reflects current market conditions and is added to the fixed margin to calculate fully-indexed interest. The index rate is variable.

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How much the interest rate can adjust up or down from one adjustment period to the next.

Months

Enter the number of months between index rate adjustments.

CALCULATE
Fixed rate loan:
Adjustable rate loan:

These calculations are tools for learning more about the mortgage process and are for estimation purposes only. Payment shown does not include taxes, insurance, or mortgage insurance (if applicable). This does not constitute an offer or approval of credit. Contact a PrimeLending home loan officer for actual estimates.

For example, a Conventional fixed rate loan with the terms purchase price of $300,000, on a loan term of 360 months, down payment of 20%, and an interest rate of 3.125%, will result in an annual percentage rate of 3.188% with $1900 in APR fees. Rate pulled 09/16/21, rates change daily. Loans are subject to borrower qualifications, including income, property evaluation, and final credit approval.

Fixed vs. Adjustable Costs

These are the total costs of the loans over the years you have specified.

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