body {
font-family: -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif;
line-height: 1.6;
color: #333;
max-width: 800px;
margin: 0 auto;
padding: 20px;
}
.calculator-wrapper {
background-color: #f8f9fa;
border: 1px solid #e9ecef;
border-radius: 8px;
padding: 30px;
margin-bottom: 40px;
box-shadow: 0 4px 6px rgba(0,0,0,0.05);
}
.calc-header {
text-align: center;
margin-bottom: 25px;
color: #2c3e50;
}
.input-group {
margin-bottom: 20px;
}
.input-group label {
display: block;
margin-bottom: 8px;
font-weight: 600;
color: #495057;
}
.input-wrapper {
position: relative;
display: flex;
align-items: center;
}
.input-wrapper input {
width: 100%;
padding: 12px;
font-size: 16px;
border: 1px solid #ced4da;
border-radius: 4px;
transition: border-color 0.15s ease-in-out;
}
.input-wrapper input:focus {
border-color: #007bff;
outline: none;
}
.suffix {
position: absolute;
right: 15px;
color: #6c757d;
font-weight: 500;
}
.calc-btn {
display: block;
width: 100%;
padding: 14px;
background-color: #007bff;
color: white;
border: none;
border-radius: 4px;
font-size: 18px;
font-weight: 600;
cursor: pointer;
transition: background-color 0.2s;
margin-top: 25px;
}
.calc-btn:hover {
background-color: #0056b3;
}
.result-box {
margin-top: 30px;
padding: 20px;
background-color: #ffffff;
border-left: 5px solid #28a745;
border-radius: 4px;
display: none;
}
.result-item {
margin-bottom: 15px;
border-bottom: 1px solid #eee;
padding-bottom: 10px;
}
.result-item:last-child {
border-bottom: none;
margin-bottom: 0;
padding-bottom: 0;
}
.result-label {
font-size: 14px;
color: #6c757d;
text-transform: uppercase;
letter-spacing: 0.5px;
}
.result-value {
font-size: 28px;
font-weight: 700;
color: #28a745;
}
.result-sub {
font-size: 18px;
color: #333;
font-weight: 600;
}
.article-content h2 {
color: #2c3e50;
margin-top: 40px;
border-bottom: 2px solid #eee;
padding-bottom: 10px;
}
.article-content h3 {
color: #34495e;
margin-top: 25px;
}
.article-content p {
margin-bottom: 15px;
}
.article-content ul {
margin-bottom: 20px;
padding-left: 20px;
}
.article-content li {
margin-bottom: 8px;
}
.info-box {
background-color: #e8f4fd;
padding: 15px;
border-radius: 5px;
border-left: 4px solid #007bff;
margin: 20px 0;
}
.error-msg {
color: #dc3545;
font-size: 14px;
margin-top: 5px;
display: none;
}
function calculateIndexedRate() {
// 1. Get references to DOM elements
var indexInput = document.getElementById('currentIndexValue');
var marginInput = document.getElementById('lenderMargin');
var resultBox = document.getElementById('resultDisplay');
var finalRateSpan = document.getElementById('finalRate');
var displayIndexSpan = document.getElementById('displayIndex');
var displayMarginSpan = document.getElementById('displayMargin');
var errorMsg = document.getElementById('errorDisplay');
// 2. Parse values
var indexVal = parseFloat(indexInput.value);
var marginVal = parseFloat(marginInput.value);
// 3. Validation
if (isNaN(indexVal) || isNaN(marginVal)) {
errorMsg.style.display = "block";
resultBox.style.display = "none";
return;
} else {
errorMsg.style.display = "none";
}
// 4. Calculate Logic
// Fully Indexed Rate = Index + Margin
var calculatedRate = indexVal + marginVal;
// 5. Formatting results (Round to 3 decimal places for precision)
var formattedRate = calculatedRate.toFixed(3);
// 6. Update UI
finalRateSpan.innerHTML = formattedRate + "%";
displayIndexSpan.innerHTML = indexVal;
displayMarginSpan.innerHTML = marginVal;
// Show result box
resultBox.style.display = "block";
}
Understanding the Fully Indexed Rate
The Fully Indexed Rate is a critical concept for borrowers with Adjustable-Rate Mortgages (ARMs) or other variable-rate credit products. It represents the actual interest rate you are obligated to pay after any initial "teaser" or fixed-rate period expires.
Unlike a fixed-rate mortgage where the interest rate remains static for the life of the loan, an ARM fluctuates based on broader economic conditions. The specific rate you pay at any given adjustment period is determined by adding two specific components together:
Formula:
Fully Indexed Rate = Benchmark Index Value + Lender Margin
Component 1: The Benchmark Index
The index is a variable financial indicator that reflects the cost of borrowing money in the economy. It fluctuates based on market conditions. Common indices used in mortgage lending include:
- SOFR (Secured Overnight Financing Rate): A broad measure of the cost of borrowing cash overnight collateralized by Treasury securities.
- CMT (Constant Maturity Treasury): Based on the yields of U.S. Treasury securities adjusted to constant maturities (e.g., 1-year CMT).
- Prime Rate: The underlying index for most credit cards and home equity lines of credit (HELOCs).
You do not control the index; it is determined by the market. When the index goes up, your fully indexed rate goes up.
Component 2: The Lender Margin
The margin is a fixed percentage point value added to the index. This is determined by the lender during the origination of your loan and is outlined in your loan note.
Unlike the index, the margin typically does not change over the life of the loan. It represents the lender's profit and risk markup. For example, a common margin might be 2.25% or 2.75%.
How the Adjustment Works
When your ARM is scheduled to adjust (e.g., annually after the first 5 years), the lender looks at the current value of the specific index tied to your loan (usually looking back 45 days). They take that value and add your fixed margin.
Example Scenario:
- Your loan margin is fixed at 2.50%.
- At the time of adjustment, the 1-Year CMT Index is 4.00%.
- Your new Fully Indexed Rate = 4.00% + 2.50% = 6.50%.
Caps and Limits
It is important to note that while the calculator above determines the theoretical fully indexed rate, your actual rate change might be limited by Interest Rate Caps. Most ARMs have:
- Initial Adjustment Cap: Limits how much the rate can change the first time it adjusts.
- Periodic Cap: Limits how much the rate can change during subsequent adjustment periods.
- Lifetime Cap: The maximum interest rate that can ever be charged on the loan.
If the calculated fully indexed rate exceeds these caps, your actual rate will be restricted to the cap limit.
Why Calculate This?
Calculating your fully indexed rate is essential for financial planning. If you are currently in the fixed period of an ARM, you should periodically check the index value to estimate what your rate might jump to once the adjustment phase begins. This helps you decide whether it is time to refinance into a fixed-rate loan before your payments increase.