Halito, if you want to verify, take your loan doc software and calculate a payment on $10,000 for 180 months (I'm using an example of 5 year ARM 180 month term) at say 7%. Payment should be around $89. Print the amortization schedule and take the balance shown for the end of year 5. Recalculate your payment based on that balance (around $7784), the maximum rate (we'll say 13%) and change the term from 180 to 120 (ten years left in the loan term). The payment will be around $116. Your payment example should coincide with those figures.
PS. Just understand that you have to take the balance at the end of the period where the loan will reach the maximum rate, and then adjust your remaining term from there. In the example I gave you the loan could have reached its maximum rate at the first rate change date. You also have to take into consideration the rate caps that may apply before the loan reaches its maximum interest rate.
Last edited by Dan Persfull; 07/07/06 07:42 PM.
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The opinions expressed are mine and they are not to be taken as legal advice.