ARM Rate Adjustment Calculator
Plan for your mortgage interest changes after the ARM reset and see if refinancing is better.
Additional Information and Definitions
Loan Amount Remaining
How much principal is left on your ARM. Must be a positive value.
Current ARM Interest Rate (%)
Your ARM's old annual interest rate before it resets.
Adjusted Rate After Reset (%)
New annual interest rate once your ARM resets. E.g. 7% means 7.0.
Refinance Fixed Rate (%)
Annual interest rate if you decide to refinance to a fixed mortgage today.
Months Left at Old Rate
How many months remain before your ARM's interest rate switches to the adjusted rate.
Stay with ARM or Refinance?
Estimate next 12 months' costs between both scenarios.
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Key ARM Concepts
Understanding the adjustable-rate mortgage reset helps weigh your options:
ARM Reset:
When your initial ARM period ends and the interest rate changes. Often, it can significantly increase or decrease your monthly costs.
Refinance Fixed Rate:
An interest rate you secure now for a new, stable mortgage. Potentially avoids future fluctuations in monthly payments.
Months Left at Old Rate:
How many months you still enjoy the initial ARM rate. Typically less expensive than the adjusted rate that follows.
Monthly Rate Calculation:
Divides the annual interest rate by 12. It's used here for monthly interest estimates over the short 12-month horizon.
5 Eye-Opening Facts About ARMs
Adjustable-rate mortgages can surprise you in many ways. Here are a few interesting insights.
1.Your Payment Could Plummet
Yes, ARMs can reset to a lower rate if market conditions favor it, leading to lower monthly payments than before.
2.Rate Caps Don't Always Protect You Fully
While there might be a cap on how high your rate can go in one reset, multiple resets can still push it quite high eventually.
3.Timing the Reset is Everything
Some homeowners plan major life events or home sales around an ARM reset to avoid higher costs or penalty fees.
4.Refinancing Might Require Appraisal
Lenders often require a new home appraisal before offering a refinance. Market changes in your property's value can affect the deal.
5.Hybrid ARMs Aren't Always 50-50
The initial rate period can vary widely, such as 5, 7, or 10 years at a fixed rate, followed by annual or bi-annual resets.