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The option ARM vs. fixed rate mortgage calculator will calculate how the lower monthly mortgage payment on an option ARM can save you money when compared to a fixed rate mortgage. This calculator will show you how much you can save on a monthly basis.
There are two main types of mortgages: adjustable rate mortgages (ARMs) and fixed rate mortgages. One type of adjustable rate mortgage is an option ARM. Typically, an option ARM has a low introductory interest rate that is fixed for a short period of time, perhaps one or three months. This means that your monthly mortgage payments will be fixed for this same one- or three-month period. Since the interest rate on an option ARM is generally much lower than a fixed rate mortgage, the monthly mortgage payments on option ARMs are usually much lower as well.