ARM Amortization Schedule

Posted By: Wonderofitall

ARM Amortization Schedule - 04/22/22 08:37 PM

Doing our first secondary market ARM. The loan has a fixed rate for the first 10 years, the start rate is greater than the index + margin, and the floor is the margin.

Should the am schedule reflect 120 payments of X (fixed rate) and 240 payments of Y (index + margin)? LOS is giving us something different than this.
Posted By: rlcarey

Re: ARM Amortization Schedule - 04/22/22 10:55 PM

That sounds correct me - what is the LOS showing?
Posted By: Rocky P

Re: ARM Amortization Schedule - 04/22/22 11:42 PM

Only case where it might be different is if the bank has small caps for the first change period. If the rate is (for example) 4.5%, margin of 2.5% but annual change caps of 1%, it will go from 4.5% to 3.5% at the first change to 2.5% thereafter.
Posted By: Wonderofitall

Re: ARM Amortization Schedule - 04/25/22 03:10 PM

No caps to limit rate change. Start Rate is 3.375%, Index is .288, Margin is 3, but LOS is using 3.5% as the rate for the term remaining after fixed rate ends. Remaining term should be 3.288% shouldn't it?
Posted By: rlcarey

Re: ARM Amortization Schedule - 04/25/22 10:52 PM

Is it set to round up to the nearest .125%?