APR Calculator for Adjustable Rate Mortgages
The annual percentage rate (APR) is defined as an annualized cost of credit. When it comes to mortgage financing, the APR is the actual rate of interest paid by the borrower including upfront costs such as points, closing costs, and prepaid interest. By law, a mortgage lender must disclose the APR to borrowers when quoting the interest rate. Because the APR includes other costs besides the actual amount of the mortgage, it is higher than the interest rate that is used to calculate monthly mortgage payments.
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Closing Costs: $4,800.00
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Loan APR 4.703%
Total Payments $364,814
Principal Balance by Year
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Original or expected balance for your mortgage. Taxpayers can deduct the interest paid on first and second mortgages up to $1,000,000 in mortgage debt (the limit is $500,000 if married and filing separately). Any interest paid on first or second mortgages over this amount is not tax deductible. Home equity loans are limited to $100,000 or the amount of equity you have in your home. Our calculator limits your interest deduction to the interest payment that would be paid on a $1,000,000 mortgage.
Annual interest rate for this mortgage.
Term in years
The number of years over which you will repay this loan. The most common mortgage terms are 15 years and 30 years.
Monthly principal and interest payment (PI).
Loan origination percent
The percent of your loan charged as a loan origination fee. For example, a 1% fee on a $120,000 loan would cost $1,200.
Total number of "points" purchased to reduce your mortgage's interest rate. Each 'point' costs 1% of your loan amount. As long as the points paid are not a broker's commission, they are considered tax deductible in the year that they were paid.
Any other fees that should be included in the APR calculation. These fees can vary by lender, but at a minimum usually includes prepaid interest.
Annual Percentage Rate (APR)
A standard calculation used by lenders. It is designed to help borrowers compare different loan options. For example, a loan with a lower stated interest rate may be a bad value if its fees are too high. Likewise, a loan with a higher stated rate with very low fees could be an exceptional value. APR calculations incorporate these fees into a single rate. You can then compare loans with different fees, rates or different terms.
Why use the APR Calculator for Adjustable Rate Mortgages?
The APR calculator for adjustable rate mortgages will help you to determine the annual percentage rate (APR) that you will be charged for an adjustable mortgage. This calculator will also help you to calculate what the expected mortgage payment will be based on your expected rate adjustment when your mortgage rate adjusts.
How to use The APR Calculator for Adjustable Rate Mortgages
Not sure where to start? Let us help you:
- Enter the amount you intend to borrow by typing into the white box or using the slider
- Specify the number of years over which you will repay the loan
- Input the initial mortgage rate of the loan
- Enter the current index – if you are at the start of your mortgage or haven’t purchased one yet, this is likely to be the same as the starting interest rate
- Add the margin – this is a percentage that will most likely remain the same throughout the term of your mortgage. It can be added to the index to calculate the fully indexed rate
- Click the [ ] icon to expand the Adjustments section
- Add the number of months that your rate will remain fixed, and the number of months between adjustments thereafter (typically this is 12 months)
- Enter the highest percentage you expect your interest rate to change by
- In Closing Costs, enter the percentage of your property’s value you will pay as an origination fee, and input any points or other fees that need to be included
- Click View Report to see a breakdown of your results.
Who is this Calculator for?
This calculator is most useful if you:
- Know the interest rate and fees of a mortgage loan but haven’t yet been disclosed the APR
- Are looking at buying a property using an ARM
- Are planning a budget and want to take all of your fees into consideration.
I can afford this rate, what next?
Click Get FREE Quote on the orange button above – we will ask a few simple questions and before you know it, you will have our handpicked mortgage loan providers coming directly to you with their very best offers. Try it now!
What is a fully amortizing ARM?
Adjustable-rate mortgages (ARMs) that are fully amortizing have a maximum interest rate which they cannot exceed. They are therefore different from standard ARMs, where the rate is fully adjustable according to the index rate at the time. ARMs are described by writing how long the rate is fixed for, and how often it will adjust for the remainder of the term. For example, a 10/1 ARM would be fixed for 10 years, and adjust every 1 year from that point onward.
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