Use this calculator to calculate your monthly adjustable rate mortgage payment:
Hey guys sam here with salmon real estate and finance on another video in this video i’m going to show you how to use an arm mortgage calculator in a previous video i showed you how to calculate an adjustable rate mortgage or how to calculate your the rate on an adjustable rate mortgage so in this video we’re going to talk about how to use a mortgage calculator to
Figure out what your payments will be like on an adjustable rate mortgage or arm but before i get started please make sure you like and subscribe to this video just really helps me out with the youtube algorithm i love creating videos like this to educate people on financing mortgages and real estate all right so let’s begin so in the previous video i talked about
Adjustable rate mortgages and how it’s calculated and the different types of arms so here here in this little graph you can see that these are the different types of arms and uh here you have a three one arm which three meaning that it’s fixed for three years and one meaning that it adjusts annually so a five year arm sits fixed for five years and it adjusts annually
After that uh 60 months then you have the seven year and you have a tenure now down here you have a three six which means that it’s fixed for three years and then after the three year period it adjusts every six months same with the remaining ones here you have a five year which five six arm which means that it’s fixed for five years then it adjusts every six months
And so on and so forth so these below here these 10 the 10 six the seven six the five six and the three six you typically see a lower rate but obviously these are more risky because if your rates adjust every six months it can adjust up or it can adjust down so it is a little bit of fluctuations it could be volatile during that period and your monthly payment can
Fluctuate with this type of arm and it can be unpredictable because we will not know at what point of the market cycle will be in when these rates adjust now with a three five seven and a ten year arm or ten one seven one five one and a three one obviously there is going to be some fluctuations but you still have at least a year before that rate adjusts so yeah
It’s a look it fluctuates but you still have plenty of time to kind of adjust to the rate either going up or the rate going down i would say if you’re going to get in to an arm and you’re looking to refinance it just all depends on what your situation is you know if you plan on being in the house but you want to lower rate you know you can look at a 7-1 or a 10 one
Where you can refinance before the loan adjusts and that way it gives you some time but again this is speculating because we don’t know what rates will look like in seven years or ten years so you do carry some risk uh taking out one of these mortgage loan products so you have to have a set plan and know exactly what you’re doing all right so i’m gonna have a link
To this calculator in the description so you guys can play around with it but let’s just say you have a mortgage of 250 000 the term is 30 years your initial interest rate is 4.85 and here is your monthly payment now this is without taxes insurance and away fees for anything or escrow so this is just your bare monthly payment so now we’re factor in adjustments so
Let’s say you have a 5-1 arm right so this is 60 months so this is five years and it adjusts so this will actually be a five six right so it’s going to adjust every six every six months so after the five years it’s gonna adjust every six months and let’s just say the adjustment is 0.25 right so this is 0.25 going up so this is a piece and in your cap meaning the
Rate cannot go any more than this or you will not have a rate higher than this amount this would be your cap here you can see that your payment will be 1601 so you go from a fixed of 1319 and after the five-year period it goes up about 0.25 and it adjusts 0.25 percent and you see an increase of six six almost three hundred dollars so that’s a huge huge jump right
So my suggestion would be if you’re going to get into an arm you you want to refi before it adjusts all right okay so now in this example we’re going to say the the months before the justice five years we have a one-year adjustment so every one year it adjusts and it’s gonna adjust instead of the one we originally had we’re gonna say that just minus 1.5 percent
So with a minus 1.5 percent what are your payments going to look like so it’s going to be an adjustment of 1.5 percent from your initial 4.85 so you’re gonna minus the one 0.5 from the 4.85 and then we’re going to go to view report and it should give us what that rate will be so it’ll be 3.35 percent after five years and your payment is going to come down almost
200 and a little over 200 and you’ll be instead of paying 13 19 23 you’ll be paying 11 28.48 mind you this is without taxes without including taxes insurance and hoa fees and escrow all right now after uh a year after that your rate cannot go lower than two percent so it’s not going to go lower than two percent but if it adjusts and it goes to it continues to
Drop to two percent your payment even goes lower another 200 a little over two hundred dollars to 976. so i’m not likely that that’ll happen but it’s a possibility depending on what the market is doing at that time so this is a great calculator you can really play around with this look at what current rates are and just plug these numbers in and just kind of see
If you know this is something that you might want to consider again if you’re going to do any of these arms because you’re thinking about getting a low rate just keep in mind that these rates are will fluctuate and depending on the terms that you have they can adjust annually or every six months depending on the arm type that you get all right and the goal really
Should be to probably get in at a low rate and look and you want to look to refi out of these types of loans because you don’t want to get caught with an adjustment period where the rig adjusts upward and your payments are way over where you can afford to make payments on the property so that’s it for this video if you guys have any questions i’ll have a link to
This calculator in the description and yeah i’ll see you guys on the next one
Transcribed from video
How To Calculate Your Monthly Adjustable Rate Mortgage Loan Payment – ( Arm Loan ) By Loans With Sam
