ARM mortgage loan calculators can estimate how much money your monthly payment will be with an adjustable rate mortgage (ARM). Don't be surprised if you have to use these calculators more than once since ARM rates have the potential to go up and down frequently.
Adjustable Rate Mortgages
Estimating the monthly payment for a mortgage is usually a relatively simple process, but when the mortgage is an ARM, the estimates can be a little more complicated. Since the interest rate can go up or down based on the index the rate is tied to, it is highly unlikely that the monthly payment for the ARM will remain the same for the life of the loan. Using ARM mortgage loan calculators can reveal what the monthly payment will be based on a variety of interest rate scenarios. What if the interest rate goes up? How much will the monthly payment be? What if the interest rate actually goes down? What will the monthly savings be? These are the types of questions that can be answered by using one of these calculators.
An Evolving Process
Homeowners will have more than one occasion to use this type of calculator:
- Before obtaining an ARM loan, to see the fluctuations in monthly payments they may experience.
- While paying an ARM loan, to find out what upcoming interest rate fluctuations may be possible.
- When considering a refinance, to see if an ARM will save money.
- To find out how much extra monthly payments are necessary to pay the ARM loan off quicker.
ARM mortgage loan calculators allow homeowners (or prospective homeowners) to get a fairly accurate estimate of the monthly payments they will experience in a variety of circumstances. These calculators are only estimates, particularly since these calculators do not take into account extra fees that may be charged by lenders. For example, a borrower refinancing a fixed rate mortgage into an adjustable rate mortgage may forget to take into consideration the fact that he or she rolled the closing costs into the loan, which will have an effect on the overall amount paid over the life of the loan as well as the monthly payment.
Treat these calculators as estimates as opposed to definitive tools that will predict the exact amount of money you can expect to pay for your ARM loan. Even if the calculator is featured on your lender's official website, you should still consider it to be a tool for estimates and subject to change. When dealing with mortgages--especially with adjustable rate mortgages--assume that the actual numbers for monthly payments are not set until you sit down to close on the loan.
Find ARM Mortgage Loan Calculators
Sitting down with a mortgage consultant is one option for plugging numbers into an ARM calculator. The advantage to this method is that you can get any questions answered throughout the process. If you prefer to utilize an ARM calculator on your own, you will be pleased to find a wide variety of options online.
Here is a short list of some of the best ARM calculators available online:
- Lending Tree: The additional benefit to this website is that you can use it to apply for a mortgage after you have run the numbers through the calculator.
- BankRate: This website allows you to calculate payments for more than one type of ARM loan.
Be sure to also check the website for your mortgage lender because they may feature tools that allow you to plug information into the calculator automatically from your existing accounts, if applicable.
Prepare for Changes
ARM loans can be incredibly appealing as a result of their initial low interest rates, but it is important to remember that these interest rates can rise significantly throughout the life of the loan. Before accepting an ARM, use a calculator to get an estimate of how much money you may pay per month if your ARM adjusts to its maximum interest rate cap.