Adjustable rate or fixed rate?
Model an adjustable-rate mortgage with its caps and compare it with a fixed rate over the years you expect to keep the loan.
01Loan
02Caps & index
▦Year by year
| Year | Fixed payment | Adj. rate (assumed) | Adj. payment | Adj. rate (worst) | Adj. payment (worst) |
|---|---|---|---|---|---|
| 1 | $2,528.27 | 5.875% | $2,366.15 | 5.875% | $2,366.15 |
| 2 | $2,528.27 | 5.875% | $2,366.15 | 5.875% | $2,366.15 |
| 3 | $2,528.27 | 5.875% | $2,366.15 | 5.875% | $2,366.15 |
| 4 | $2,528.27 | 5.875% | $2,366.15 | 5.875% | $2,366.15 |
| 5 | $2,528.27 | 5.875% | $2,366.15 | 5.875% | $2,366.15 |
| 6 | $2,528.27 | 7.000% | $2,626.66 | 7.875% | $2,837.65 |
| 7 | $2,528.27 | 7.000% | $2,626.66 | 9.875% | $3,335.30 |
Each row shows the rate at the start of that year.
±Trade-offs to weigh
Adjustable
- Lower starting rate and payment
- Can make sense if you expect to sell or refinance before the first adjustment
Fixed
- Principal & interest payment never changes
- No rate risk, so budgeting is simple
Neither option is right for everyone. It depends on your timeline, cash and comfort with risk.
ƒHow this is calculated
- After the fixed period, each adjustment moves the rate toward the assumed index + margin, limited by the first, later and lifetime caps. The payment is then recalculated over the remaining term.
- Worst case: every adjustment rises by the full cap until it reaches the lifetime cap.
Estimates for illustration only. This is not a loan offer, rate quote, or commitment to lend. Results come only from the numbers entered above. Interest rates are examples you supply, not advertised rates, so check current rates before deciding. Fee schedules and limits shown are published figures that can change.
This calculator is being provided for educational purposes only. The results are estimates based on information you provided and may not reflect CrossCountry Mortgage, LLC product terms. The information cannot be used by CrossCountry Mortgage, LLC to determine a customer’s eligibility for a specific product or service.
Austin Gerimonte, NMLS #2277430 · CrossCountry Mortgage, LLC NMLS #3029 · Equal Housing Lender · NMLSConsumerAccess.org