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Smart Rate Adj Mortgage vs. Fixed Rate

A fixed rate mortgage has the same payment for the entire term of the loan. A Smart Rate adjustable mortgage (ARM) has a rate that can change, causing your monthly payment to increase or decrease. Use this calculator to compare a fixed rate mortgage to two Smart Rate adjustable mortgage scenarios:
  1. A fully amortizing Smart Rate mortgage on which you make the minimum payments required.
  2. A fully amortizing Smart Rate mortgage on which you choose to make a larger, fixed payment each month. Most people want to see how quickly they can pay down their adjustable rate mortgage if they were to make the same higher payment required for a fixed rate mortgage for the same loan amount. For this reason, we have defaulted the 'Desired Fixed Monthly Payment' to the same amount as the fixed rate mortgage payment.

Smart Rate Adj Mortgage vs. Fixed Rate Definitions

Fixed Mortgage
A fixed rate mortgage has the same interest rate and monthly payment throughout the term of the mortgage. The payment is calculated to payoff the mortgage balance at the end of the term. The most common terms are 15 years and 30 years.
Mortgage amount
Expected balance for your mortgage. If this is a new mortgage, enter the new mortgage amount. If this is an existing mortgage, enter the original mortgage balance and we will estimate your remaining loan balance.
Interest rate
Annual interest rate for each mortgage type. Typically an ARM will have a lower interest rate than a fixed rate mortgage.
Term in months
The number of months over which you will repay this mortgage. The most common mortgage terms are 15 years (180 months) and 30 years (360 months). For existing mortgages, this is the original term in months.
Payments made
Number of payments that have been made on the mortgage if this is an existing mortgage. We use this, the original mortgage balance and the original term length to estimate the remaining loan balance.
Smart Rate Adjustable Mortgage
This is an fully amortizing adjustable rate mortgage (ARM). The monthly payment is calculated to payoff the entire mortgage balance at the end of the term. The term is typically 30 years, but you can select any term length. After the fixed interest rate period has passed, the interest rate and payment adjusts annually. A Fully Amortizing ARM will also have a maximum rate that it will not exceed.
Smart Rate Adjustable Mortgage Choices
ARM TypeMonths Fixed
5/1 ARMFixed for 60 months, adjusts annually for the remaining term of the loan.
3/1 ARMFixed for 36 months, adjusts annually for the remaining term of the loan.
Years rate fixed
This is the number of years the rate is fixed for an ARM. During this period the interest rate and the monthly payment will remain fixed. The rate will then adjust annually by the annual rate change.
Annual rate change
The annual adjustment you expect in your ARM. The range for this calculator is minus 2% to plus 2%. Use a negative value if you believe interest rates will decrease, a positive value if you believe they will increase.
Interest rate cap
This is the maximum interest rate for this mortgage. The mortgage's interest rate will never exceed the interest rate cap.
Desired fixed monthly payment
This is the desired monthly payment you would like to make with a new Smart Rate Adjustable Mortgage. The amount defaults to the amount needed to maintain your original fixed rate payment. This payment can be any amount at or higher than the calculated payment for the new Smart Rate Adjustable Mortgage.