Calculating APOR for 5/1 ARM

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Question:

If we have a 5/1 ARM when we use the ARM table do we use 5 yr APOR rate or the 30 yr? A lot of people are saying we should use the 30 yr versus the change date because the rate can actually go down depending on rates?

Answer:

You use the term to the first rate change date. Open the FFIEC calculator, click on HELP and then search "Variable term".

First published on BankersOnline.com 3/21/11