RATE GUIDE

Extra payments on fixed vs adjustable mortgages

An extra principal payment reduces the balance on both fixed-rate and adjustable-rate mortgages. The difference is certainty: a fixed-rate calculation can use the stated rate, while an adjustable-rate estimate cannot predict future rate resets.

Model an ARM carefully

Use today’s rate for a baseline, then repeat the calculation with a higher rate to understand sensitivity. Review the note for adjustment dates, caps and margins rather than relying on a single projection.

Focus on principal

Regardless of rate type, verify that the servicer applies the extra amount to principal. Keep payment confirmations and review the next statement.