Calculate an Adjustable Rate Mortgage (ARM) An adjustable rate mortgage is a type of mortgage where the interest rate is fixed for an initial period of time. At the end of that period, the interest rate is allowed to change by the adjustment amount each adjustment period. The interest rate continues to change until the term is up or until it hits the interest rate cap Principle balance:     $ Initial interest rate of mortgage:      % Length of initial term:      years Total length of mortgage:      years Years between adjustments:      years Expected adjustment:      % Interest rate cap:      % Down Payment:     $ Starting month and year:     Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec 2008200920102011201220132014201520162017 * Calculations do not include closing costs, insurance fees or taxes Definitions Principle Balance: The initial amount the mortgage is taken out for. Initial Interest Rate: The cost of borrowing the money for the initial term of the mortgage. Length of Initial Term: The number of years the interest rate is fixed at the initial interest rate. Total Length of Mortgage: The total number of years that you have to pay the mortgage off. Years Between Adjustments:     The interval at which the interest is allowed to change once the intial term has expired. For example, if you enter 2 years, then the interest rate will be allowed to change once every 2 years after the initial term has expired. Expected Adjustment: The amount that the interest rate is expected to change at every adjustment interval. For example, if the adjustment interval you specify is 2 years and the expected adjustment is .25% then the interest rate will increment by .25% every 2 years after the initial term has expired. Interest Rate Cap: The maximum that the interest rate can ever be. Down Payment: Amount of money that you pay off when you take out the mortgage. This amount gets deducted from the principle balance and does not get charged interest. Starting Month and Year: The month and year that the mortgage starts.