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#1989170 - 01/15/15 11:07 PM Rate Spread Calculator with an ARM
Multiple Hats Offline
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When you have a 5/1 ARM amortized over 20 years which amortization type do you select, Fixed or Adjustable? An ARM has an inital fixed rate which makes me think you would select "Fixed" since the instructions for the Term section have you input the number of years for the fixed rate part of the loan. That would mean you only use "Variable" when the loan is a variable rate the entire time without an initial fixed period? Or is it as simple a all fixed loans use "Fixed" and all variable rate loans use variable?

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#1989190 - 01/16/15 01:11 PM Re: Rate Spread Calculator with an ARM Multiple Hats
Island Dreaming Offline
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midwest
All variable rate loans use the adjustable button. However, you would enter the initial fixed rate period as the term in field 3 - in your example, it would be 5.
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#1989200 - 01/16/15 01:48 PM Re: Rate Spread Calculator with an ARM Multiple Hats
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
From the handy dandy help section of the calculator. The HELP button is in the upper left hand corner.

Fixed term (loan maturity) or Variable term (initial fixed-rate period)

◦ The loan term has a different meaning depending on whether the loan is fixed- or variable- rate. For a fixed-rate loan, the term is the loan’s maturity (i.e. the period until the last payment will be due under the loan contract. For a variable-rate loan, the term is the initial, fixed-rate period (i.e. the period until the first schedule rate reset).

◦ The loan term, should be entered in years using whole numbers between 1 and 50. Terms consisting of a whole number of years and a fraction of a year should be rounded to a whole number according to the following rule: a fractional year of .5 or less should be rounded to the lower term, and a fractional year greater than .5 should be rounded to the higher term. There is an exception for a loan term shorter than six months, which should be rounded to 1.

◦ If the amortization period of a loan is longer than the term of the loan – i.e., because the loan has a balloon feature- the lender should use the term when selecting the applicable yield. For example, in the case of a five-year loan that has a balloon payment because the payments are amortized over 30 years, the term of five years must be used.

◦ In an Adjustable Rate Mortgage (ARM) situation, there may be a long period to maturity and a feature whereby the rate adjusts at a much earlier time -- for example, five years. In that case, as explained above, the term is the initial, fixed-rate period, not the full term to maturity. For example, a 5/30 ARM that is amortized over 30 years should use 5 as the loan term,with the initial rate fixed for the first five years.

◦ If an obligation is payable on demand, the creditor shall make the disclosures based on an assumed maturity of 1 year. If an alternate maturity length is stated in the legal obligation between the parties, the maturity shall be based on that length.
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#2161554 - 01/23/18 08:07 PM Re: Rate Spread Calculator with an ARM Multiple Hats
Yada...Yada...Yada... Offline
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Joined: Jan 2005
Posts: 279
Question regarding this not for HMDA, but for check rate spread on a variable rate HELOC. Five year HELOC tied to prime where initial rate is "fixed" for one month since the rate can only change monthly. For Variable Term we would put 1. Correct? And do we click on Fixed or Adjustable on Amortization Type?
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#2161607 - 01/24/18 12:07 PM Re: Rate Spread Calculator with an ARM Multiple Hats
rlcarey Online
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rlcarey
Joined: Jul 2001
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Galveston, TX
Variable and one year.
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