Calculator Inputs
Example Data Table
These sample values illustrate a typical reset scenario.
| Balance | Current Rate | Remaining Term | Index | Margin | Cap | Effective Rate | Estimated New Payment |
|---|---|---|---|---|---|---|---|
| $300,000 | 5.75% | 300 months | 3.25% | 2.25% | ±2.00% | 5.50% | $1,703.37 |
Formula Used
The payment after a reset is typically recalculated to fully amortize the remaining balance over the remaining term at the new rate.
Rate construction and caps
- Base reset rate: either your entered reset rate, or index + margin.
- Change cap: limits how far the rate can move from the current rate at an adjustment.
- Lifetime limits: constrain the rate relative to the initial rate (cap up / floor down).
- Absolute floor: optional hard minimum rate.
- Rounding: applies common rate-increment rounding after caps/floors.
How to Use This Calculator
- Enter your current balance and remaining term in months.
- Choose payment frequency to match your loan schedule.
- Provide the current rate and (optionally) your current payment.
- Enter either a reset rate, or an index and margin.
- Add caps, floors, and rounding to mirror your loan terms.
- Click Calculate to view the payment change and schedule.
- Use the download buttons to export CSV or PDF.
Why reset payments jump
When an adjustable‑rate mortgage resets, the lender recalculates payment to amortize the remaining balance at the new periodic rate. Even small rate moves can cause noticeable “payment shock.” For example, on a $300,000 balance with 25 years left, raising the rate from 5.75% to 6.75% increases a typical monthly payment by about $185. Interest‑only periods can also change the pattern because the early payment tracks interest, not principal.
Understanding index, margin, and caps
Most ARMs use a fully indexed rate: index + margin. If the index is 3.25% and the margin is 2.25%, the fully indexed rate is 5.50%. Caps then limit how far the rate can move. A periodic cap of ±2.00% constrains each adjustment relative to the current rate, while lifetime caps and floors constrain the rate relative to the initial rate. Rounding rules can add small increments.
Payment cap versus rate cap
Some loans include a payment cap in addition to rate caps. A payment cap limits the scheduled payment increase by a percent, even if the effective rate would require more. If your current payment is $1,900 and the cap is 7.5%, the capped payment is $2,042.50. If this payment does not cover interest, unpaid interest may be added to the balance, increasing future costs.
What the schedule totals reveal
The amortization schedule totals translate the reset into long‑term dollars. Watch total interest, payoff date, and how much principal you retire each period. Extra payments can be very powerful. Using the same $300,000 balance at 5.50% with 25 years remaining, adding $100 per month would pay off about 30 months sooner and reduce interest by roughly $29,900. Exports help you compare scenarios side‑by‑side.
Steps to reduce payment shock
To prepare, test several reset rates and cap settings, then plan to absorb the highest realistic payment. Consider applying a one‑time principal curtailment before the reset to lower the recalculated payment. If you have flexibility, increase your recurring extra payment during the first year after reset. Also review refinancing, recasting, or switching frequency to match cash‑flow timing. Document assumptions so you can update inputs when the index changes.
FAQs
What inputs do I need from my loan statement?
Use the most recent statement for current balance, note rate, payment frequency, and remaining term. Your loan disclosure or servicer website may list index, margin, and cap structure. Enter these values, then adjust the reset rate to test scenarios.
Why can the effective reset rate differ from index plus margin?
Caps and floors may limit the index-plus-margin result. The calculator applies first or periodic change caps, then lifetime limits, then any absolute floor and rounding. The displayed effective reset rate is the value actually used for the new payment schedule.
How does payment frequency change the result?
Monthly, biweekly, and weekly schedules convert the annual rate into a periodic rate. More frequent payments usually reduce interest accumulation and can shorten payoff time. If your loan bills monthly, keep monthly to match your statement.
What is negative amortization, and when does it matter?
Negative amortization happens when the scheduled payment is less than the interest due. Unpaid interest is added to the balance. It can occur with payment caps or very low payments. Disable it if your loan does not allow it.
Why can interest-only payments vary by period?
During an interest‑only phase, the payment equals interest on the current balance. Because the balance changes with extra payments and rounding, the interest amount can vary slightly each period. After the IO phase, the payment switches to an amortizing amount.
Do the CSV and PDF downloads match the on-screen schedule?
Yes. CSV includes every period with payment, interest, principal, and balance. PDF includes the same schedule plus a summary page for key inputs and totals. If you print the browser page, the chart and buttons are hidden.