# ARM APR Calculator

When you include any associated upfront costs, this calculator can help you figure out the effective interest rate that you’re paying on your adjustable rate mortgage (ARM). Enter the mortgage loan amount, the beginning interest rate, current index percentage, and the margin percentage. Select your loan term and provide the necessary information regarding loan adjustments. Finish up by including the numbers related to closing costs.

Click on “Calculate,” and you’ll get a breakdown of your monthly costs, as well as the APR attached to your ARM. Press “Create Amortization Schedule,” and a new browser window will open with a printable report.

Do you need to know the current market conditions in your local area? We publish current Seattle fixed & ARM mortgage rates to help you make accurate calculations and connect with local lenders.

Loan Basics Amount
Loan oan amount:
Beginning interest rate (APR %): SEE BEST RATES
Current index (%):
Margin (%):
Loan term (years):
Loan Closing Costs Amount
Origination fee percent (%):
Points paid (%):
Other fees to include:
Total closing costs:
Beginning monthly principal and interest payment:
Fully indexed payment:
Total monthly payments:
Total interest:

## Today's Seattle Fixed & ARM Mortgage Rates

The following table shows current mortgage rates in Seattle. Adjust your loan inputs to match your scenario and see what rates you qualify for.

## Figuring the APR of an Adjustable Rate Loan

Looking to refinance or mortgage a new home? When comparing mortgages, it is tricky to determine the pros and cons of each one and calculate interest rates and monthly payments. With so many factors involved, how do you find the right mortgage for you?

### Fixed Rate Versus Adjustable Rate Loan

When searching for your perfect home loan, there are two different types you will encounter. The first is a fixed rate loan. A fixed rate loan is one with a fixed interest rate and a monthly payment that remains constant throughout the full term, typically 15 or 30 years. The second is an adjustable rate mortgage loan (ARM). An ARM will start at a lower interest rate, so it may look like you are saving money. After the initial fixed period, however, the interest rate will readjust. The interest rates could begin to readjust as often as monthly, based on the current market rates, and could eventually double your monthly payments.

So why would someone want to take out an ARM? Lenders generally start the loan at a lower interest rate, since it will readjust based on current market rates. Because of this lower initial rate, borrowers are able to qualify for a larger loan so they are able to buy a more expensive house.

### What is an APR?

While comparing ARMs, it is important to look at not only the interest rates, but the annual percentage rate (APR) as well. A mortgage's interest rate refers to how much you pay additionally for borrowing the loan. An APR refers to the mortgage's interest rate, as well as the mortgage broker fees, points, and any additional charges you may pay. When looking at the APR of an ARM, keep in mind that the APR doesn't reflect the maximum interest rate. Don't base your mortgage decision solely upon the APR.

What can you do to improve the APR of your potential mortgage? What factors can affect your APR?

• Credit Score: Your credit score is the number one factor that affects your APR. The higher your credit score, the lower your interest rate, because you are viewed as less of a risk.
• Debt to Income Ratio: Even with a high credit score, the bank subtracts how much money you pay to the mortgage, along with any other financial obligations, from your monthly income. The larger the ratio, the higher the interest rate. Even with a good credit score, you are a higher risk.
• Loan Term: The longer the term of the mortgage loan, the higher the interest rate, due to the bank's risk of inflation.
• Points: Points are a cost included in the calculated APR that you can pay off at the start of your loan to lower the interest rate. Each point paid will generally reduce the interest rate by about 0.25 percent and cost about 1 percent of the loan to pay off.
• Closing Costs: Closing costs are an additional fee set by the bank that are factored into your APR. The closing costs will vary solely based upon the bank. The higher the closing costs, the higher your APR.

Next you'll need to determine how to compare loans based on the APR, as well as what variables will affect your APR. Can you calculate your own APR? With an adjustable rate mortgage loan, it's hard to calculate an exact APR because your rate may change after the initial fixed period. To get the closest estimation, borrowers can use the fully indexed rate (FIR), instead of the starting rate, to calculate the APR.

The FIR is an interest rate which is calculated by adding the margin to an index level. This interest rate will correspond with an index, such as LIBOR or the prime rate, which may increase or decrease based on the market. For example, the FIR on an ARM tied to the LIBOR index with a margin of 3 percent would be 10 percent if the index were at 7 percent.

To make an example, consider a \$200,000 loan over 30 years with a FIR of 5.5 percent and \$4,000 in additional fees. Simply add the amount of your loan and any extra loan fees (\$200,000 + \$4,000 = \$204,000), find your adjusted monthly payment (\$204,000 at 5.5 percent over 30 years), and type in various interest rates into your calculator. You will find that 5.68 percent produces the closest monthly payment, telling you that 5.68 percent is your APR.

Consider these pros and cons of taking out an ARM and methods for improving your APR, and you can find the mortgage loan that is right for your financial situation.

## Seattle Residents: Get Preapproved for Your Mortgage Today

Seattle residents can obtain a free no-obligation quote in a matter of minutes. Secure your Seattle mortgage today.