Which is better: fixed or adjustable?

Calculator to compare a fixed vs. an adjustable rate (ARM) mortgage

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Fixed or adjustable?

Compare total payments over the years you plan to stay.

Loan amount$300,000

Fixed rate6.5%

ARM initial rate5.5%

ARM rate after reset7.5%

ARM fixed period

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Years you’ll stay7 yr

Loan term

ARM costs less over 7 yrs$7,883

Fixed @ 6.5%

Monthly payment$1,896

7-yr cost$159,281

Better choice

ARM 5/1 @ 5.5%

Initial payment$1,703

Resets to7.5%

7-yr cost$151,398

Compares total payments over 7 years, assuming the ARM adjusts to 7.5% after 5 years.

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Estimates for illustration only — not a commitment to lend.

Monthly payments are shown for illustrative purposes only. Other PMI, taxes, insurance, or applicable escrows may apply. Accuracy is not guaranteed and products may not be available for all borrower situations. Illustrative payment amounts assume a borrower(s) with excellent credit. Interest rates and annual percentage rates (APRs) are based on current market rates, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables—call for details. This is not a credit decision or a commitment to lend. Depending on loan guidelines, mortgage insurance may be required. If mortgage insurance is required, the mortgage insurance premium could increase the APR and the monthly mortgage payment. Additional loan programs may be available. APR reflects the effective cost of your loan on a yearly basis, taking into account such items as interest, most closing costs, discount points (also referred to as“points”) and loan-origination fees. One point is 1% of the mortgage amount (e.g. $1,000 on a $100,000 loan). Your monthly payment is not based on APR, but instead on the interest rate on your mortgage note.