# APR Calculator for Adjustable Rate Mortgages

## Online APR Calculator for Adjustable Rate Mortgages

Do you want to compare and rank multiple adjustable rate mortgages (ARM) with different terms and payments? In that case, the first thing you need to do is translate those mortgages into one standard measure so that you can perform effective comparison. APR or Annual Percentage Rate is the way you can set this standard and this particular calculator will do exactly the same.
ACalculator assumes that the adjustable rate mortgage (ARM) is fully amortizing over the period. The process is, the payments are fixed for certain times and after that payments are adjusted annually to repay the remaining amount. The following table will show the most common terms for adjustable rate mortgage:

ARM TypeMonths Fixed
10/1 ARMFixed for 120 months, and then annually adjusts.
7/1 ARMFixed for 84 months, and then annually adjusts.
5/1 ARMFixed for 60 months, and then annually adjusts.
3/1 ARMFixed for 36 months, and then annually adjusts.
Mortgage amount
Value of the mortgage.
Starting interest rate
Annual rate of interest agreed initially when you entered the contract.
Term in years
Number of years it will take to repay the mortgage.
Current index
Interest rate of the ARM as mentioned in the index. The final and fully indexed rate is found by adding this current index rate and margin.
Margin
Percentage rate of interest above the set index, or the ‘margin’. This can be used to calculate the Fully Indexed Rate.
Starting monthly payment
The total amount of initial principal and interest. This is found by multiplying the initial interest rate and initial monthly payment.
Loan origination percent
Percentage rate charged to cover the loan origination costs.
Discount points
Spending 1% of the loan amount can get you one discount point. These points are tax deductible elements until utilized as broker’s commission.
Other fees
Prepaid interest and other fees and charges that has not been included so far.
Interest rate cap
The highest limit for charging interest rate. It’s impractical that the actual rate of interest will rise beyond this rate.