How much will my adjustable rate payments be?
Loan amount
$
Home Loan Amount
Appraised value
$
Home Value
Term (years)
Home Loan Term in Years
Yearly property insurance
$
Yearly Property Insurance
Yearly property tax
$
Yearly Property Tax
Your state + federal tax rate
Tax rate
%
Months before first adjustment
Months before first rate adjustment
Initial interest rate
Home loan adjustable rate
%
Months between rate adjustments
Months between rate adjustments
Maximum rate adjustment
Maximum rate changed allowed per adjustment
%
Minimum rate
Minimum rate
%
Maximum rate
Maximum rate
%
Margin
Margin
%
Index rate
Index rate
%
Months between index adjustments
Months between index adjustments
Index rate change per adjustment
Index rate change per adjustment
%
Predicted change in rates
Interest rates will remain the same
Interest rates will increase
Interest rates will decrease
Appraisal value:
Appraisal value is the market value of an asset that is derived from the appraisal process. Depending on the asset, the method used to appraise the asset will differ. For homes, appraisers often use a method that includes recent sales data of comparable homes. They may also use the replacement method, which is the cost to replace the home at today's prices.
Margin:
The fixed amount a lender adds to the base rate of an adjustable-rate mortgage to set the loan rate.
Interest rate floor:
The minimum interest rate that can be charged on an adjustable interest rate loan during the term of the loan.
Anniversary date:
The periodic date, usually once a year, that the interest rate is reset on an adjustable-rate mortgage.
Periodic rate cap:
The periodic interest rate cap is the maximum amount the loan rate can change on an adjustable-rate mortgage loan on the anniversary date. ARM loan rates are often reset once a year after an initial period. A lifetime cap often exists. A lifetime cap limits the maximum loan rate that can be charged.
Lifetime cap:
A lifetime cap is the limit to how much the interest rate on an adjustable-rate loan can be increased over the term of the loan.
Private mortgage insurance (PMI):
An insurance policy that protects lenders against loss if a borrower defaults. Typically required if the loan-to-value (LTV) ratio of the home exceeds 80%.
Treasury bills (T-bills):
U.S. Treasury bills are short-term debt obligations of the U.S. Treasury. T-bills are usually issued to mature in three or six months. Prices for T-bills are stated as a discount to the par value. For example, a T-bill with a price of 99.65 is selling for 99.65% of its par value. T-bills are auctioned weekly and used to pay operations of the federal government. T-bills are considered to be among the safest and most liquid investments.
Spread:
The arithmetic difference between two interest rates, usually stated in basis points. One percentage point consists of 100 basis points.
Months between rate adjustments:
The frequency at which interest rate changes or resets on an adjustable-rate mortgage occur.
Adjustment period:
The initial fixed-interest-rate period on an adjustable rate mortgage loan. For example, a 5-year ARM would have an adjustment period of 60 months.
Initial interest rate:
The starting interest rate on an adjustable-rate mortgage loan, which is often below market ARM rates.
Tax rates:
The percentage of your taxable income that is owed to the state and federal governments. The tax rate increases as the taxable base amount increases.
Yield:
The annual income provided by a fund, share or bond expressed as a percentage. Yield is normally calculated by dividing the current price of the asset by the income. For example, the yield on a bond that sells for $1,000 and has a coupon rate of 8% is 8%. If the bond price rises to $1,050, the yield falls to 7.62%. If the price drops to $950, the current yield rises to 8.42%. Redemption yield is the interest rate that you are getting if you buy a bond at the current price and hold it until redemption.
Index rate:
An index rate is a widely used, benchmark interest rate that lenders use to set the interest rate on loans and credit cards.
Months between index adjustments:
The frequency of change for the index, the benchmark interest rate to which an adjustable rate mortgage is tied.
Term:
The period of a loan, generally measured in years. Auto loans generally range from 2 to 5 years. Mortgage loans: 15 to 30 years.
Predicted future interest rate:
Your prediction of the magnitude of change in the interest rate used to price your loan. Future rates are assumed to change at the same rate every year.
Homeowner's insurance:
Protects the homeowner from weather-related damage, as well as potential liability from events that occur on the property. Normally required by lenders.
Adjustable-rate mortgage (ARM):
A type of mortgage loan in which the interest rate paid on the outstanding balance varies according to a specific benchmark.
Property tax:
A tax assessed on real estate by the local government, usually based on the value of the property (including the land) you own.
Interest rate cap:
The maximum interest rate that can be charged on an adjustable interest rate loan during the term of the loan.
Property Taxes and Homeowner's Insurance:
A typical monthly mortgage payment consists of amounts for loan principal, interest, property taxes, and homeowner's insurance.