By Jeff Brown, BankingMyWay Adjustable rate mortgages aren't very popular with folks seeking new loans these days, since they don't offer much upfront savings. But if you're thinking of getting rid of an ARM you already have, keep in mind a benefit often overlooked: making extra principal payments on an ARM brings results much quicker than it does on a standard, fixed rate mortgage. With a fixed loan, extra principal payments let you pay the debt off years early, but the monthly payments stay the same as when the loan was first issued. Make an extra principal payment on an ARM, however, and the required monthly payment will be reduced next time the loan resets, usually every 12 months. With both types of loans, pre-payments reduce the total interest paid over the years. Getting that benefit right away, with an ARM, reduces your cost of living, freeing money for other purposes and making life easier if your income drops. An ARM payment is recalculated on the annual reset date by applying the new interest rate to the remaining years and principal - the amount still owed. It's as if a new mortgage were being issued. Imagine that last year you'd gone to Wells Fargo ( WFC), Bank of America ( BAC) or Citibank ( C), and taken out a $200,000 30-year ARM that charged 6 percent. The monthly payment would be $1,199, according to Banking MyWay's mortgage rate calculator. Over the past year, your payments would have reduced the outstanding principal to $197,544.