Adjustable Rate Mortgage Calculator This calculator is designed to help you determine the approximate monthly payments associated with an adjustable rate loan. Mortgage Balance: Interest Rate: Number Of Payments: Monthly Payment: function calculate() { let balance = document.calculatorForm.balance.value; let interestRate = document.calculatorForm.interestRate.value / 100; let numberOfPayments = document.calculatorForm.numberOfPayments.value; let monthlyPayment = balance * interestRate * Math.pow((1 + interestRate), numberOfPayments) / (Math.pow((1 + interestRate), numberOfPayments) - 1); document.getElementById("monthlyPayment").innerHTML = "$" + monthlyPayment.toFixed(2); } An Introduction to Adjustable Rate Mortgage Calculators If you are considering a mortgage loan, you have probably heard the term “adjustable rate mortgage” or ARM. An ARM is a type of home loan in which the interest rate can change periodically, usually over the course of several years. The amount of the change and the length of time that the rate stays constant is determined by the agreement you have with the lender. An adjustable rate mortgage calculator is a great tool to help you figure out what your payments will be and how much interest you will pay over the life of the loan. Understand How Adjustable Rate Mortgage Calculators Work Adjustable rate mortgages have become increasingly popular over the years because of their potential to offer lower monthly payments. However, there is much more to calculating the payments on an ARM loan than simply looking at the interest rate. ARM calculators take into account the loan amount, the start date of the loan, the interest rate, the initial adjustment period, the index, the margin, the lifetime cap, and the recast period. The loan amount is the amount of money you borrow from the lender. The start date of the loan is the day the loan begins and is the day that the interest rate calculation begins. The interest rate is the rate of interest that you pay each month on the loan. The initial adjustment period is the number of years that the interest rate will remain fixed. Usually, this is between three and five years. The index is the measure used to determine the market interest rate. The margin is an additional amount that the lender adds to the index. The lifetime cap is the highest interest rate that may be charged throughout the life of the loan, and the recast period is the length of time after which the loan is recalculated at the new rate. Benefits of Using Adjustable Rate Mortgage Calculators Adjustable rate mortgage calculators are extremely useful when you are considering an ARM loan. These calculators provide an estimate of your monthly payments over the life of the loan, giving you a better idea of what you can expect to pay each month for your mortgage. They also allow you to compare ARM loans with fixed-rate loans to determine which option is best for you. An adjustable rate mortgage calculator can also help you to determine how much interest you will pay over the life of your loan. Since an ARM loan has a variable interest rate, the amount of interest paid can vary greatly over the course of the loan. With an adjustable rate mortgage calculator, you can see how much interest you would pay over the life of the loan based on the current market conditions. Drawbacks of Adjustable Rate Mortgage Calculators While adjustable rate mortgage calculators are extremely helpful in helping you to make educated decisions about an ARM loan, they are not perfect. Since the interest rate can vary wildly during the life of an ARM loan, it can be difficult for the calculator to accurately predict your future payments. Additionally, since the length of the adjustment period can vary widely between loans, a few months of extra payments can drastically reduce the amount of interest you pay. Finally, ARM calculators assume that you will stay in your home for the whole life of the loan. If you move during the adjustment period, the ARM calculator may not be able to accurately predict the amount of interest you will pay over the life of the loan. Conclusion Adjustable rate mortgage calculators can be extremely helpful in understanding how an ARM loan works and estimating the amount of interest you will pay over the life of the loan. However, it's important to remember that the interest rate can vary over time and that the calculator may not be able to accurately predict the interest rate or the total amount of interest you will pay.