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Future Value Calculator

Comparing Two ARMs

Who This Calculator is For: Borrowers trying to decide between two ARMs.

What This Calculator Does:This calculator compares
the total cost of an ARM with another ARM,
over a specified future period. It allows the upfront costs to be financed.

Information About Yourself
  How Long Do You Expect to Stay in Your House, in Years?
  Rate of Interest on Savings  (e.g. 3.5)
  Income Tax Bracket ( e.g. 27 )
  Current Value of House (e.g. 225000)
  Optional:  Expected Rate of Property Value Appreciation
Basic Loan Information ARM #1 ARM #2
  Loan Amount
  Starting Interest Rate  (e.g. 3.00)
  Loan Term
  Mortgage Insurance (Monthly Premium Plan)
  Points  ($'s or % of Loan)
  All Other Closing Costs
  Points and Costs Are:
  Optional: Number of Years Each Loan is Interest-Only
Interest Rate Index ARM #1 ARM #2
  ARM Interest Rate Index  ( e.g. 1.54 )
  Margin That is Added to Interest Rate Index  (e.g. 2.75)
Next Rate Adjustment    
  Number of Months to Next Rate Adjustment  (e.g. 36)
  Maximum Interest Rate Change on Next Rate Adjustment  (e.g. 5.0)
Subsequent Rate Adjustments    
  Duration, in Months, Between Subsequent Rate Adjustments  (e.g. 12)
  Maximum Rate Change on Subsequent Rate Adjustments  (e.g. 2.0)
Maximum / Minimum Rates    
  Maximum Interest Rate Over Life of Mortgage  (e.g. 12.5)
  Minimum Interest Rate Over Life of Mortgage  (e.g. 4.5)
Assumptions About Future Interest Rates ( Only 1 scenario allowed per run )
 Stable Index:           Interest Rate Index Stays Unchanged for Life of Mortgage
 Worst Case:            Interest Rate Rises to the Maximum Allowable Rate in the Second Month
   Annual Change
to Begin in Year
x Years
Per Year
 Upward Movement:     Interest Rate Index Rises for:
 Downward Movement:  Interest Rate Index Declines for:
  Years Between
Direction Changes
Percent Change
Per Year
Volatile:                  Interest Rate Index Rises, Then Declines:
 Volatile:                  Interest Rate Index Declines, Then Rises:


This is your marginal tax rate, the rate at which each additional dollar of income will be taxed. If you pay only Federal income taxes, it is the highest tax bracket you used when you calculated your taxes. Federal tax brackets currently are: 10%, 15%, 25%, 28%, 33%, and 35%. If you also pay state and/or local income taxes, these marginal rates can be added to the Federal rate. For example, if you had to pay 25% to the IRS and 5% to the state of Pennsylvania, your tax bracket is 30%. To perform a "pre-tax" analysis enter zero (0) as the tax rate. Select the specific index used by your ARM from the ARM disclosure form. The amount that is added to the index value on a rate adjustment date. It is shown in the ARM disclosure form. Begin with the month in which the first payment is due. This is the number of months until the first rate adjustment. This is the maximum amount that the interest rate can change on the first rate adjustment. ARMs that have initial rate periods of 5 years or longer often have larger adjustment caps on the first rate adjustment than on subsequent adjustments. After the initial rate period, the rate on most ARMs changes every year, every 6 months, or every month. This affects the relative cost of ARMs and FRMs because ARMs tend to have lower costs in the early years. Down payment as a percent of sale price or property value, whichever is lower. This affects the relative cost of ARMs and FRMs because mortgage insurance premiums are higher on some ARMs. Any number up to 10 will be assumed to be a percent of the loan amount. Any number above 10 will be treated as a dollar amount. You can safely leave out any expenses expressed as a percent of the loan which are the same for the FRM and ARM, such as title insurance or transaction taxes. If the FRM and ARM loan amounts are the same, you can also leave out any dollar expenses which are the same for both mortgages, such as charges by escrow agents for closing services. For further information, read "How to Shop Settlement Costs". (Click on link at bottom of page) This affects the after-tax interest cost because on a purchase transaction points are fully deductible in the first year whereas on a refinance the deduction must be spread over the life of the loan, with the remaining portion of the deduction taken in the year the loan is paid in full. Given the down payment, term and mortgage type you have selected, the numbers shown are typical annual premium rates for "monthly premium plans" that involve no upfront premium. You can override these numbers if you are quoted different rates for monthly premium plans. Enter 1 if you want the rate increase to begin immediately, 2 if you want it to begin at the start of year 2, and so on.