If you are considering a new mortgage or refinance, you can enter the loan amount and the various interest rates into this spreadsheet template, and it will calculate a comparison to show you a comparison of the interest rates, up-front costs, and monthly payments.
What is Adjustable-Rate Mortgage (ARM) ?
An adjustable-rate mortgage (ARM) is a type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan. With an adjustable-rate mortgage, the initial interest rate is fixed for a period of time. After this initial period of time, the interest rate resets periodically, at yearly or even monthly intervals. ARMs are also called variable-rate mortgages or floating mortgages. The interest rate for ARMs is reset based on a benchmark or index, plus an additional spread called an ARM margin. (Source : Investopedia)
What is Fixed Rate Mortgage ?
The term “fixed-rate mortgage” refers to a home loan that has a fixed interest rate for the entire term of the loan. This means the mortgage carries a constant interest rate from beginning to end. Terms can range anywhere between 10 and 30 years for fixed-rate mortgages, which are popular products for consumers who want to know how much they’ll pay every month. (Source : Investopedia)