Fixed Rate vs ARM Mortgage Calculator

The fixed rate vs ARM rate calculator allows you to input the loan variables associated with both mortgage types and gives you a report in return that compares how much both types of mortgage programs will potentially cost you side by side. A third column is also generated for Interest Only mortgages.

Fixed rate mortgages have historically been more popular with home buyers as you have the security of always knowing your P & I payment is the same as when you began the loan. Adjustable rate mortgages became popular as home prices escalated and interest only options were added. The net affect was a severe rash of foreclosures, and a housing value plummet, due to the fact that ARM programs can and will fluctuate which can raise or lower your monthly P & I payment dramatically. The consequence of rising mortgage payments compounds the difficulty or maintaining an affordable household budget and can lead to eventual foreclosure, forced shot-sales and eventual bankruptcy.

So what do you choose? During periods where interest rates are extremely high versus historical norms (12% to 18%), an adjustable rate mortgage is typically a much better choice as the rate will eventually fall, lowering your payment and reducing the cost of the loan. During periods of low interest rates, a 30 or 15 year fixed mortgage is the safest loan product as it will lock in your lower monthly P & I payment over the life of the loan.