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ARM & Interest Only ARM Vs. Fixed Rate Mortgage Calculator

Use this calculator to compare a fixed-rate mortgage to two types of ARMs, a Fully Amortizing ARM and an Interest Only ARM.

You can trust the integrity of our unbiased, independent editorial staff. We may, however, receive compensation from the issuers of some products mentioned in this article. See how we make money.

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Compare Your Mortgage Options

You want to look at adjustable-rate mortgages as well as fixed-rate mortgages when you’re deciding how to buy your home. You’ll want to look at the differences in order to make the right choice.

Adjustable-rate mortgages or variable-rate mortgages are ones that start with one interest rate that’s fixed for a set period of time. This rate is generally lower than what you would be offered with a fixed-rate mortgage.

Then, after that period of time your rate is able to adjust. If the market goes down you can potentially get a lower rate. If the market goes up you will pay even more for your interest.

With a fixed-rate mortgage you get a single interest rate that starts when you get the mortgage and doesn’t end until the mortgage is over. It stays exactly the same for the entire length of the mortgage from 15 years to 20 years to 30 years.

But there are different reasons to look at each of these.

Why You Want an ARM?

For those people who aren’t so sure what their long-term outlook is going to be, an adjustable rate mortgage, or ARM, could be a good option.

This is really only good for those who are planning to move before they have to deal with the change to their interest rate, so you want to choose this only if you’re going to stay in the house shorter than the fixed rate period of your loan.

You could actually get a bigger and better home for that period because your mortgage payments are based on the initial payments you’ll be making at the lower rate.

The Benefits of ARMs

Now, there are a few reasons that you might want to at least consider this option:

Low-Interest Rate

The initial interest rate on an adjustable-rate mortgage is generally the lowest that you’re going to get.

That means for the introductory period you’ll be paying less than for a fixed rate mortgage.


For those who don’t really know what’s going to happen in their life in the next couple years these can be a good way to go because they don’t cost as much.

You get to reap the benefits of the lower interest rate while you can get it. Then you can sell it off before you have to deal with the rest.

Low Monthly Payment

At least for the first part of the mortgage you’re going to be paying less in your monthly payments.

That’s going to allow you to save up some money and that means when you decide to buy that next home you may have a good amount put away to put down.

Rate/Payment Caps

Your rate does increase with an adjustable-rate mortgage, but it can only increase so much, no matter what happens in the market.

That means your payment is not allowed to balloon up too much.

Potential for Decrease

While it doesn’t happen often, it is possible that your mortgage interest rate could decrease if the market decreases.

You could have changes to the rate semi-annually or annually, depending on the agreement you make.

The Benefits of Fixed-Rate Mortgages

Now, if you’re looking to stay in one place for a long time you may want to take a look at a fixed-rate mortgage instead.

These are good for those who want to make a plan for their financial future and plan to stay in one place instead. These can be good for several reasons:

Consistent Payments

With this type of loan you’re going to pay the same amount every month from the beginning of the mortgage until the end.

You don’t have to worry about changing interest rates. The lender makes sure that the full mortgage amount plus interest is divided out over each month of the term.

Fixed Interest Rate

With a fixed mortgage the interest rate you pay at the start of the mortgage is the same one you will pay at the end.

There’s no way for the lender to change your rate unless you choose to refinance. This means you don’t have to worry about surprises when it comes to your monthly bill.

Easy to Compare

When you’re shopping around it’s simple to compare a fixed rate mortgage because you just look at the costs and fees and the interest rate.

With an adjustable-rate mortgage you also have to look at how long the fixed period is and how frequently it can adjust.

Flexible Options

You get to choose between different lending terms when it comes to a fixed-rate mortgage. You can get a mortgage that ranges anywhere from 10 years to 40 years and get that amount of time to pay things off.