# The Interest Rate Margin Makes a Difference

This example illustrates how the margin impacts your interest rate on an adjustable rate mortgage.

When a loan adjusts the margin is added to the index to determine the interest rate. The index rate will vary over time. The margin typically is fixed for the life of the loan. It should be clearly specified in your loan documents.

After reviewing this example use the adjustable rate mortgage calculator with your mortgage data or explore the other examples.

This example shows a mortgage with no minimum interest rate. It highlights the role of the margin by examining a very unlikely scenario, the best case scenario where the index rate goes to zero in the 2nd month and stays at zero for the duration of the mortgage. Since there is no minimum rate, the borrower will be charged the 4.5% margin beginning in the second year.
Best
MonthInterest
Rate
Index
Rate
Payment Interest Principal Balance
17.500%3.000%\$1,398\$1,250\$148\$199,852
27.500%0.000%\$1,398\$1,249\$149\$199,702
37.500%0.000%\$1,398\$1,248\$150\$199,552
47.500%0.000%\$1,398\$1,247\$151\$199,401
57.500%0.000%\$1,398\$1,246\$152\$199,249
67.500%0.000%\$1,398\$1,245\$153\$199,095
77.500%0.000%\$1,398\$1,244\$154\$198,941
87.500%0.000%\$1,398\$1,243\$155\$198,786
97.500%0.000%\$1,398\$1,242\$156\$198,630
107.500%0.000%\$1,398\$1,241\$157\$198,473
117.500%0.000%\$1,398\$1,240\$158\$198,315
127.500%0.000%\$1,398\$1,239\$159\$198,156
Year 1  \$16,781\$14,937\$1,844
134.500%0.000%\$1,020\$743\$277\$197,879
144.500%0.000%\$1,020\$742\$278\$197,600
154.500%0.000%\$1,020\$741\$280\$197,321
164.500%0.000%\$1,020\$740\$281\$197,040
174.500%0.000%\$1,020\$739\$282\$196,759
184.500%0.000%\$1,020\$738\$283\$196,476
194.500%0.000%\$1,020\$737\$284\$196,192
204.500%0.000%\$1,020\$736\$285\$195,908
214.500%0.000%\$1,020\$735\$286\$195,622
224.500%0.000%\$1,020\$734\$287\$195,335
234.500%0.000%\$1,020\$733\$288\$195,047
244.500%0.000%\$1,020\$731\$289\$194,758
Year 2  \$12,246\$8,848\$3,398
254.500%0.000%\$1,020\$730\$290\$194,468
264.500%0.000%\$1,020\$729\$291\$194,176
274.500%0.000%\$1,020\$728\$292\$193,884
284.500%0.000%\$1,020\$727\$293\$193,591
294.500%0.000%\$1,020\$726\$295\$193,296
304.500%0.000%\$1,020\$725\$296\$193,000
314.500%0.000%\$1,020\$724\$297\$192,704
324.500%0.000%\$1,020\$723\$298\$192,406
334.500%0.000%\$1,020\$722\$299\$192,107
344.500%0.000%\$1,020\$720\$300\$191,807
354.500%0.000%\$1,020\$719\$301\$191,506
364.500%0.000%\$1,020\$718\$302\$191,203
Year 3  \$12,246\$8,691\$3,555
374.500%0.000%\$1,020\$717\$303\$190,900
384.500%0.000%\$1,020\$716\$305\$190,595
394.500%0.000%\$1,020\$715\$306\$190,289
404.500%0.000%\$1,020\$714\$307\$189,982
414.500%0.000%\$1,020\$712\$308\$189,674
424.500%0.000%\$1,020\$711\$309\$189,365
434.500%0.000%\$1,020\$710\$310\$189,055
444.500%0.000%\$1,020\$709\$312\$188,743
454.500%0.000%\$1,020\$708\$313\$188,430
464.500%0.000%\$1,020\$707\$314\$188,117
474.500%0.000%\$1,020\$705\$315\$187,802
484.500%0.000%\$1,020\$704\$316\$187,485
Year 4  \$12,246\$8,528\$3,718
494.500%0.000%\$1,020\$703\$317\$187,168
504.500%0.000%\$1,020\$702\$319\$186,849
514.500%0.000%\$1,020\$701\$320\$186,529
524.500%0.000%\$1,020\$699\$321\$186,208
534.500%0.000%\$1,020\$698\$322\$185,886
544.500%0.000%\$1,020\$697\$323\$185,563
554.500%0.000%\$1,020\$696\$325\$185,238
564.500%0.000%\$1,020\$695\$326\$184,912
574.500%0.000%\$1,020\$693\$327\$184,585
584.500%0.000%\$1,020\$692\$328\$184,257
594.500%0.000%\$1,020\$691\$330\$183,927
604.500%0.000%\$1,020\$690\$331\$183,597
Year 5  \$12,246\$8,357\$3,889
614.500%0.000%\$1,020\$688\$332\$183,265
624.500%0.000%\$1,020\$687\$333\$182,931
634.500%0.000%\$1,020\$686\$335\$182,597
644.500%0.000%\$1,020\$685\$336\$182,261
654.500%0.000%\$1,020\$683\$337\$181,924
664.500%0.000%\$1,020\$682\$338\$181,586
674.500%0.000%\$1,020\$681\$340\$181,246
684.500%0.000%\$1,020\$680\$341\$180,905
694.500%0.000%\$1,020\$678\$342\$180,563
704.500%0.000%\$1,020\$677\$343\$180,220
714.500%0.000%\$1,020\$676\$345\$179,875
724.500%0.000%\$1,020\$675\$346\$179,529
Year 6  \$12,246\$8,179\$4,067
734.500%0.000%\$1,020\$673\$347\$179,182
744.500%0.000%\$1,020\$672\$349\$178,833
754.500%0.000%\$1,020\$671\$350\$178,483
764.500%0.000%\$1,020\$669\$351\$178,132
774.500%0.000%\$1,020\$668\$352\$177,780
784.500%0.000%\$1,020\$667\$354\$177,426
794.500%0.000%\$1,020\$665\$355\$177,071
804.500%0.000%\$1,020\$664\$356\$176,714
814.500%0.000%\$1,020\$663\$358\$176,356
824.500%0.000%\$1,020\$661\$359\$175,997
834.500%0.000%\$1,020\$660\$361\$175,637
844.500%0.000%\$1,020\$659\$362\$175,275
Year 7  \$12,246\$7,992\$4,254
854.500%0.000%\$1,020\$657\$363\$174,912
864.500%0.000%\$1,020\$656\$365\$174,547
874.500%0.000%\$1,020\$655\$366\$174,181
884.500%0.000%\$1,020\$653\$367\$173,814
894.500%0.000%\$1,020\$652\$369\$173,445
904.500%0.000%\$1,020\$650\$370\$173,075
914.500%0.000%\$1,020\$649\$371\$172,704
924.500%0.000%\$1,020\$648\$373\$172,331
934.500%0.000%\$1,020\$646\$374\$171,957
944.500%0.000%\$1,020\$645\$376\$171,581
954.500%0.000%\$1,020\$643\$377\$171,204
964.500%0.000%\$1,020\$642\$378\$170,825
Year 8  \$12,246\$7,796\$4,450
974.500%0.000%\$1,020\$641\$380\$170,445
984.500%0.000%\$1,020\$639\$381\$170,064
994.500%0.000%\$1,020\$638\$383\$169,681
1004.500%0.000%\$1,020\$636\$384\$169,297
1014.500%0.000%\$1,020\$635\$386\$168,911
1024.500%0.000%\$1,020\$633\$387\$168,524
1034.500%0.000%\$1,020\$632\$389\$168,136
1044.500%0.000%\$1,020\$631\$390\$167,746
1054.500%0.000%\$1,020\$629\$391\$167,354
1064.500%0.000%\$1,020\$628\$393\$166,962
1074.500%0.000%\$1,020\$626\$394\$166,567
1084.500%0.000%\$1,020\$625\$396\$166,171
Year 9  \$12,246\$7,592\$4,654
1094.500%0.000%\$1,020\$623\$397\$165,774
1104.500%0.000%\$1,020\$622\$399\$165,375
1114.500%0.000%\$1,020\$620\$400\$164,975
1124.500%0.000%\$1,020\$619\$402\$164,573
1134.500%0.000%\$1,020\$617\$403\$164,170
1144.500%0.000%\$1,020\$616\$405\$163,765
1154.500%0.000%\$1,020\$614\$406\$163,358
1164.500%0.000%\$1,020\$613\$408\$162,950
1174.500%0.000%\$1,020\$611\$409\$162,541
1184.500%0.000%\$1,020\$610\$411\$162,130
1194.500%0.000%\$1,020\$608\$413\$161,717
1204.500%0.000%\$1,020\$606\$414\$161,303
Year 10  \$12,246\$7,378\$4,868
1214.500%0.000%\$1,020\$605\$416\$160,888
1224.500%0.000%\$1,020\$603\$417\$160,471
1234.500%0.000%\$1,020\$602\$419\$160,052
1244.500%0.000%\$1,020\$600\$420\$159,632
1254.500%0.000%\$1,020\$599\$422\$159,210
1264.500%0.000%\$1,020\$597\$423\$158,786
1274.500%0.000%\$1,020\$595\$425\$158,361
1284.500%0.000%\$1,020\$594\$427\$157,934
1294.500%0.000%\$1,020\$592\$428\$157,506
1304.500%0.000%\$1,020\$591\$430\$157,076
1314.500%0.000%\$1,020\$589\$431\$156,645
1324.500%0.000%\$1,020\$587\$433\$156,212
Year 11  \$12,246\$7,154\$5,092
1334.500%0.000%\$1,020\$586\$435\$155,777
1344.500%0.000%\$1,020\$584\$436\$155,341
1354.500%0.000%\$1,020\$583\$438\$154,903
1364.500%0.000%\$1,020\$581\$440\$154,463
1374.500%0.000%\$1,020\$579\$441\$154,022
1384.500%0.000%\$1,020\$578\$443\$153,579
1394.500%0.000%\$1,020\$576\$445\$153,134
1404.500%0.000%\$1,020\$574\$446\$152,688
1414.500%0.000%\$1,020\$573\$448\$152,240
1424.500%0.000%\$1,020\$571\$450\$151,791
1434.500%0.000%\$1,020\$569\$451\$151,339
1444.500%0.000%\$1,020\$568\$453\$150,886
Year 12  \$12,246\$6,921\$5,325
1454.500%0.000%\$1,020\$566\$455\$150,432
1464.500%0.000%\$1,020\$564\$456\$149,975
1474.500%0.000%\$1,020\$562\$458\$149,517
1484.500%0.000%\$1,020\$561\$460\$149,057
1494.500%0.000%\$1,020\$559\$462\$148,596
1504.500%0.000%\$1,020\$557\$463\$148,133
1514.500%0.000%\$1,020\$556\$465\$147,668
1524.500%0.000%\$1,020\$554\$467\$147,201
1534.500%0.000%\$1,020\$552\$468\$146,732
1544.500%0.000%\$1,020\$550\$470\$146,262
1554.500%0.000%\$1,020\$548\$472\$145,790
1564.500%0.000%\$1,020\$547\$474\$145,316
Year 13  \$12,246\$6,676\$5,570
1574.500%0.000%\$1,020\$545\$476\$144,841
1584.500%0.000%\$1,020\$543\$477\$144,363
1594.500%0.000%\$1,020\$541\$479\$143,884
1604.500%0.000%\$1,020\$540\$481\$143,403
1614.500%0.000%\$1,020\$538\$483\$142,921
1624.500%0.000%\$1,020\$536\$485\$142,436
1634.500%0.000%\$1,020\$534\$486\$141,950
1644.500%0.000%\$1,020\$532\$488\$141,462
1654.500%0.000%\$1,020\$530\$490\$140,972
1664.500%0.000%\$1,020\$529\$492\$140,480
1674.500%0.000%\$1,020\$527\$494\$139,986
1684.500%0.000%\$1,020\$525\$496\$139,490
Year 14  \$12,246\$6,420\$5,826
1694.500%0.000%\$1,020\$523\$497\$138,993
1704.500%0.000%\$1,020\$521\$499\$138,494
1714.500%0.000%\$1,020\$519\$501\$137,993
1724.500%0.000%\$1,020\$517\$503\$137,490
1734.500%0.000%\$1,020\$516\$505\$136,985
1744.500%0.000%\$1,020\$514\$507\$136,478
1754.500%0.000%\$1,020\$512\$509\$135,969
1764.500%0.000%\$1,020\$510\$511\$135,458
1774.500%0.000%\$1,020\$508\$513\$134,946
1784.500%0.000%\$1,020\$506\$514\$134,432
1794.500%0.000%\$1,020\$504\$516\$133,915
1804.500%0.000%\$1,020\$502\$518\$133,397
Year 15  \$12,246\$6,152\$6,094
1814.500%0.000%\$1,020\$500\$520\$132,877
1824.500%0.000%\$1,020\$498\$522\$132,354
1834.500%0.000%\$1,020\$496\$524\$131,830
1844.500%0.000%\$1,020\$494\$526\$131,304
1854.500%0.000%\$1,020\$492\$528\$130,776
1864.500%0.000%\$1,020\$490\$530\$130,246
1874.500%0.000%\$1,020\$488\$532\$129,714
1884.500%0.000%\$1,020\$486\$534\$129,180
1894.500%0.000%\$1,020\$484\$536\$128,644
1904.500%0.000%\$1,020\$482\$538\$128,106
1914.500%0.000%\$1,020\$480\$540\$127,565
1924.500%0.000%\$1,020\$478\$542\$127,023
Year 16  \$12,246\$5,872\$6,374
1934.500%0.000%\$1,020\$476\$544\$126,479
1944.500%0.000%\$1,020\$474\$546\$125,933
1954.500%0.000%\$1,020\$472\$548\$125,385
1964.500%0.000%\$1,020\$470\$550\$124,834
1974.500%0.000%\$1,020\$468\$552\$124,282
1984.500%0.000%\$1,020\$466\$554\$123,728
1994.500%0.000%\$1,020\$464\$557\$123,171
2004.500%0.000%\$1,020\$462\$559\$122,612
2014.500%0.000%\$1,020\$460\$561\$122,052
2024.500%0.000%\$1,020\$458\$563\$121,489
2034.500%0.000%\$1,020\$456\$565\$120,924
2044.500%0.000%\$1,020\$453\$567\$120,357
Year 17  \$12,246\$5,580\$6,666
2054.500%0.000%\$1,020\$451\$569\$119,788
2064.500%0.000%\$1,020\$449\$571\$119,217
2074.500%0.000%\$1,020\$447\$573\$118,643
2084.500%0.000%\$1,020\$445\$576\$118,067
2094.500%0.000%\$1,020\$443\$578\$117,490
2104.500%0.000%\$1,020\$441\$580\$116,910
2114.500%0.000%\$1,020\$438\$582\$116,328
2124.500%0.000%\$1,020\$436\$584\$115,743
2134.500%0.000%\$1,020\$434\$586\$115,157
2144.500%0.000%\$1,020\$432\$589\$114,568
2154.500%0.000%\$1,020\$430\$591\$113,977
2164.500%0.000%\$1,020\$427\$593\$113,384
Year 18  \$12,246\$5,273\$6,973
2174.500%0.000%\$1,020\$425\$595\$112,789
2184.500%0.000%\$1,020\$423\$598\$112,192
2194.500%0.000%\$1,020\$421\$600\$111,592
2204.500%0.000%\$1,020\$418\$602\$110,990
2214.500%0.000%\$1,020\$416\$604\$110,385
2224.500%0.000%\$1,020\$414\$607\$109,779
2234.500%0.000%\$1,020\$412\$609\$109,170
2244.500%0.000%\$1,020\$409\$611\$108,559
2254.500%0.000%\$1,020\$407\$613\$107,946
2264.500%0.000%\$1,020\$405\$616\$107,330
2274.500%0.000%\$1,020\$402\$618\$106,712
2284.500%0.000%\$1,020\$400\$620\$106,092
Year 19  \$12,246\$4,953\$7,293
2294.500%0.000%\$1,020\$398\$623\$105,469
2304.500%0.000%\$1,020\$396\$625\$104,844
2314.500%0.000%\$1,020\$393\$627\$104,217
2324.500%0.000%\$1,020\$391\$630\$103,587
2334.500%0.000%\$1,020\$388\$632\$102,955
2344.500%0.000%\$1,020\$386\$634\$102,320
2354.500%0.000%\$1,020\$384\$637\$101,684
2364.500%0.000%\$1,020\$381\$639\$101,044
2374.500%0.000%\$1,020\$379\$642\$100,403
2384.500%0.000%\$1,020\$377\$644\$99,759
2394.500%0.000%\$1,020\$374\$646\$99,112
2404.500%0.000%\$1,020\$372\$649\$98,464
Year 20  \$12,246\$4,618\$7,628
2414.500%0.000%\$1,020\$369\$651\$97,812
2424.500%0.000%\$1,020\$367\$654\$97,159
2434.500%0.000%\$1,020\$364\$656\$96,502
2444.500%0.000%\$1,020\$362\$659\$95,844
2454.500%0.000%\$1,020\$359\$661\$95,183
2464.500%0.000%\$1,020\$357\$664\$94,519
2474.500%0.000%\$1,020\$354\$666\$93,853
2484.500%0.000%\$1,020\$352\$669\$93,185
2494.500%0.000%\$1,020\$349\$671\$92,514
2504.500%0.000%\$1,020\$347\$674\$91,840
2514.500%0.000%\$1,020\$344\$676\$91,164
2524.500%0.000%\$1,020\$342\$679\$90,485
Year 21  \$12,246\$4,268\$7,978
2534.500%0.000%\$1,020\$339\$681\$89,804
2544.500%0.000%\$1,020\$337\$684\$89,120
2554.500%0.000%\$1,020\$334\$686\$88,434
2564.500%0.000%\$1,020\$332\$689\$87,745
2574.500%0.000%\$1,020\$329\$691\$87,054
2584.500%0.000%\$1,020\$326\$694\$86,360
2594.500%0.000%\$1,020\$324\$697\$85,663
2604.500%0.000%\$1,020\$321\$699\$84,964
2614.500%0.000%\$1,020\$319\$702\$84,262
2624.500%0.000%\$1,020\$316\$705\$83,557
2634.500%0.000%\$1,020\$313\$707\$82,850
2644.500%0.000%\$1,020\$311\$710\$82,140
Year 22  \$12,246\$3,901\$8,345
2654.500%0.000%\$1,020\$308\$712\$81,428
2664.500%0.000%\$1,020\$305\$715\$80,713
2674.500%0.000%\$1,020\$303\$718\$79,995
2684.500%0.000%\$1,020\$300\$721\$79,274
2694.500%0.000%\$1,020\$297\$723\$78,551
2704.500%0.000%\$1,020\$295\$726\$77,825
2714.500%0.000%\$1,020\$292\$729\$77,097
2724.500%0.000%\$1,020\$289\$731\$76,365
2734.500%0.000%\$1,020\$286\$734\$75,631
2744.500%0.000%\$1,020\$284\$737\$74,894
2754.500%0.000%\$1,020\$281\$740\$74,154
2764.500%0.000%\$1,020\$278\$742\$73,412
Year 23  \$12,246\$3,518\$8,728
2774.500%0.000%\$1,020\$275\$745\$72,667
2784.500%0.000%\$1,020\$272\$748\$71,919
2794.500%0.000%\$1,020\$270\$751\$71,168
2804.500%0.000%\$1,020\$267\$754\$70,414
2814.500%0.000%\$1,020\$264\$756\$69,658
2824.500%0.000%\$1,020\$261\$759\$68,899
2834.500%0.000%\$1,020\$258\$762\$68,137
2844.500%0.000%\$1,020\$256\$765\$67,372
2854.500%0.000%\$1,020\$253\$768\$66,604
2864.500%0.000%\$1,020\$250\$771\$65,833
2874.500%0.000%\$1,020\$247\$774\$65,059
2884.500%0.000%\$1,020\$244\$777\$64,283
Year 24  \$12,246\$3,117\$9,129
2894.500%0.000%\$1,020\$241\$779\$63,503
2904.500%0.000%\$1,020\$238\$782\$62,721
2914.500%0.000%\$1,020\$235\$785\$61,936
2924.500%0.000%\$1,020\$232\$788\$61,148
2934.500%0.000%\$1,020\$229\$791\$60,356
2944.500%0.000%\$1,020\$226\$794\$59,562
2954.500%0.000%\$1,020\$223\$797\$58,765
2964.500%0.000%\$1,020\$220\$800\$57,965
2974.500%0.000%\$1,020\$217\$803\$57,162
2984.500%0.000%\$1,020\$214\$806\$56,356
2994.500%0.000%\$1,020\$211\$809\$55,546
3004.500%0.000%\$1,020\$208\$812\$54,734
Year 25  \$12,246\$2,697\$9,549
3014.500%0.000%\$1,020\$205\$815\$53,919
3024.500%0.000%\$1,020\$202\$818\$53,101
3034.500%0.000%\$1,020\$199\$821\$52,279
3044.500%0.000%\$1,020\$196\$824\$51,455
3054.500%0.000%\$1,020\$193\$828\$50,627
3064.500%0.000%\$1,020\$190\$831\$49,797
3074.500%0.000%\$1,020\$187\$834\$48,963
3084.500%0.000%\$1,020\$184\$837\$48,126
3094.500%0.000%\$1,020\$180\$840\$47,286
3104.500%0.000%\$1,020\$177\$843\$46,443
3114.500%0.000%\$1,020\$174\$846\$45,596
3124.500%0.000%\$1,020\$171\$850\$44,747
Year 26  \$12,246\$2,259\$9,987
3134.500%0.000%\$1,020\$168\$853\$43,894
3144.500%0.000%\$1,020\$165\$856\$43,038
3154.500%0.000%\$1,020\$161\$859\$42,179
3164.500%0.000%\$1,020\$158\$862\$41,317
3174.500%0.000%\$1,020\$155\$866\$40,451
3184.500%0.000%\$1,020\$152\$869\$39,583
3194.500%0.000%\$1,020\$148\$872\$38,710
3204.500%0.000%\$1,020\$145\$875\$37,835
3214.500%0.000%\$1,020\$142\$879\$36,957
3224.500%0.000%\$1,020\$139\$882\$36,075
3234.500%0.000%\$1,020\$135\$885\$35,189
3244.500%0.000%\$1,020\$132\$889\$34,301
Year 27  \$12,246\$1,800\$10,446
3254.500%0.000%\$1,020\$129\$892\$33,409
3264.500%0.000%\$1,020\$125\$895\$32,514
3274.500%0.000%\$1,020\$122\$899\$31,615
3284.500%0.000%\$1,020\$119\$902\$30,713
3294.500%0.000%\$1,020\$115\$905\$29,808
3304.500%0.000%\$1,020\$112\$909\$28,899
3314.500%0.000%\$1,020\$108\$912\$27,987
3324.500%0.000%\$1,020\$105\$916\$27,072
3334.500%0.000%\$1,020\$102\$919\$26,153
3344.500%0.000%\$1,020\$98\$922\$25,230
3354.500%0.000%\$1,020\$95\$926\$24,304
3364.500%0.000%\$1,020\$91\$929\$23,375
Year 28  \$12,246\$1,320\$10,926
3374.500%0.000%\$1,020\$88\$933\$22,442
3384.500%0.000%\$1,020\$84\$936\$21,506
3394.500%0.000%\$1,020\$81\$940\$20,566
3404.500%0.000%\$1,020\$77\$943\$19,622
3414.500%0.000%\$1,020\$74\$947\$18,676
3424.500%0.000%\$1,020\$70\$950\$17,725
3434.500%0.000%\$1,020\$66\$954\$16,771
3444.500%0.000%\$1,020\$63\$958\$15,813
3454.500%0.000%\$1,020\$59\$961\$14,852
3464.500%0.000%\$1,020\$56\$965\$13,887
3474.500%0.000%\$1,020\$52\$968\$12,919
3484.500%0.000%\$1,020\$48\$972\$11,947
Year 29  \$12,246\$818\$11,428
3494.500%0.000%\$1,020\$45\$976\$10,971
3504.500%0.000%\$1,020\$41\$979\$9,992
3514.500%0.000%\$1,020\$37\$983\$9,009
3524.500%0.000%\$1,020\$34\$987\$8,022
3534.500%0.000%\$1,020\$30\$990\$7,032
3544.500%0.000%\$1,020\$26\$994\$6,038
3554.500%0.000%\$1,020\$23\$998\$5,040
3564.500%0.000%\$1,020\$19\$1,002\$4,038
3574.500%0.000%\$1,020\$15\$1,005\$3,033
3584.500%0.000%\$1,020\$11\$1,009\$2,024
3594.500%0.000%\$1,020\$8\$1,013\$1,011
3604.500%0.000%\$1,015\$4\$1,011\$0
Year 30  \$12,240\$293\$11,947
Grand
Total
\$371,909 \$171,909 \$200,000

## Mortgage Calculator - Help

Amortization Schedule
The amortization schedule show you how monthly principal and interest payment and principal balances change over the life of your loan.
Floor Rate
Floor rate is the minimum interest rate for an adjustable rate mortgage (ARM).
Index Rate
Rate Adjustment on ARMs are based on the index rate, the margin, the adjustment schedule, interest rate caps, and floor rate specified in your loan documents. Index rates change over time. They should be published and widely available. Common indexes used for setting mortgage rates have include the Prime Rate, Libor (London Interbank Offer Rate) and U.S. Treasury Rates.
Interest
The portion of your mortgage payment that is due to the interest rate being applied to the principal balance. The Total Interest for a mortgage is the sum of all interest paid over the life of a loan.
The interest rate changes on an adjustable rate mortage (ARM) during adjustment periods specified in your loan documents. Your interest rate may have a fixed period where it does not change followed by adjustements on a regularly scheduled basis. For example, the interest rate on a mortgage could be fixed for 2 years followed by adjustments every 6 months.
Interest Rate Caps
Limits how much your interest rate can be increased during each adjustment period for an ARM. The cap for the first adjustment period may be different than the cap on subsequent adjustments. There also may be a maximim overall cap on interest rate increases during the life of your loan.
Interest Rate Scenarios
To decide if an adjustable rate mortgage is right for you, you should how changes in interest rates will effect the mortgage. The adjustable rate mortgage calculator shows you how your payment changes in the best case where rates are set at the minimum for your mortgage, the worst case where rates are set at the maximum for your mortgage, and the stable case where rates remain constant for your mortgage.
Loan Amount
The initial principal balance or your mortgage at closing.
Margin
When an ARM adjusts the margin is added to the index rate to help determine your interest rate. Interest rate caps and the floor rate for your mortgage may limit how much your actual interest rate changes. The margin typically is fixed for the life of the loan. It should be clearly specified in your loan documents.
Payment Shock
Occurs when the required minimum payment for a mortgage increases significantly. This can occur on adjustable rate mortgage when interest rates rise sharply, on interest-only mortgages when the interest-only period ends, and on balloon mortgages when the balloon payment is due.
Principal
The portion of your mortgage payment that is used to pay down the current balance of your mortgage. The principal balance represents how much you owe on the mortgage.
Start Rate
The initial interest rate on an Adjustable Rate Mortgage.
Term
The amortization term is one of the key factors that determine your required mortgage payment. Your required mortgage payment for fully amortizing mortgages is the amount that would result in the mortgage being closest to being paid off by the end of the amortization term. Longer amortization terms result in lower required mortgage payments for fully amortizating mortgages, all other things being equal.