Before you agree to an adjustable-rate mortgage, use an adjustable-rate mortgage calculator to help determine what your payments will be when the interest rates rise and fall. Having this information will help you make a better-informed decision about whether an adjustable-rate mortgage is right for you.
Using an adjustable-rate mortgage calculator, you should be able to accurately determine what your monthly mortgage payment will be at the current interest rates and what it will be at different interest rates. These tools give you an accurate idea of what your initial payments will be and make an estimate as to what your future payments will most likely be.
Understanding future payments
It is very important that you understand that future payments are just estimates. Since nobody really knows what the market is going to do, there is no way to determine exactly how much future interest rates will rise or fall. To use adjustable-rate mortgage calculators, you must know the initial interest rate, the mortgage index, and the margin. Your financial advisor or lender should be able to provide you with this information. You will not be able to use the calculator and get accurate information without that information, and guessing at that information often proves to be a mistake.
Finding an adjustable-rate mortgage calculator
Adjustable-rate mortgage calculators are found in many places. Many websites have these calculators. They can also be found in money management software, such as Quicken and Microsoft Money. In most cases, the numbers that these calculators give you are accurate and can be depended on. However, use caution when using Web-based calculators found on the websites of mortgage companies. If possible, use several different Web-based adjustable-rate mortgage calculators instead of just depending on the calculators found at one website.
Here are a few links to calculators:
This is my favorite by bankrate.com
Here is another on mortgagecalculator.org