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Fully Amortized Adjustable Rate Mortgage

Posted on: 02nd Apr, 2004 10:52 pm
Fully Amortized ARM is an adjustable-rate mortgage (ARM) with monthly payments that are sufficient to pay off the full amount, including the principal amount and the interest, over the amortization term.

Special Features Of Fully Amortized ARM:
  • It is a payment option, which allows a borrower to reduce his/her principal and payoff his/her loan on schedule.

  • It is calculated each month depending on prior month's interest rate, loan balance and remaining loan term.

  • It offers flexibility to a borrower, when he/she is qualifying for a loan.

  • Here, a borrower can have control over finances when he/she starts making payments.
For example, if you have taken a mortgage for $1,000,000 at 8% interest for 3 years, and your monthly payments are $30,000, then it is known as fully amortized ARM since you are able to pay off the full amount over the amortization term.

Related Forums DiscussionCalculate it Yourself
if you have monthly payments of 30k, then you pay 360k per year, and a total of 1,080,000 over the term of 3 years. meaning you pay an additional 80k above the 1mm mortgage amount. This is only one year's interest at 8%. Aren't you short the 8% interest for the other 2 years??? meaning you would be short 160k????
Posted on: 16th Oct, 2009 01:25 am
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