Financing in San Antonio>Question Details

Kjo_jao, Other/Just Looking in San Antonio, TX

I need help calculating a 5/5 ARM it will adjust 3 percent per period with a 6 percent lifetime cap, its a $150,000 30 yr 6% initial interest

Asked by Kjo_jao, San Antonio, TX Wed Nov 10, 2010

I tried using an online ARM calculator but it wont let me input the numbers?

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Robin Silverberg’s answer
For lessons in what an 5/5 ARM is, you are not going to learn about it in class no matter how many degrees you have, and you probably won't learn it from any financial planning courses, but a loan officer worth anything would know, and Kjo gave enough information. A 5/5 ARM is fixed fir 5 years, then adults every 5 years thereafter. The adjustment cannot go more than 3% up or down, based on a certain margin and index, and cannot go more than 6% above the initial rate. There are 2 things that are important in trying to figure things out. You need to know what index is being used as a base for your rate, and what your margin over that index is. If you are trying to plan what your rate will be if it is about to adjust now, and you have those 2 pieces of information, we can figure that out. If you are trying to figure that out on a loan you are looking to take now, the only thing you can do is calculate your worst case scenario, which would be that you will go to 9% at the first adjustment, and could go to
12% maximum.
Generally this type pf loan is a commercial loan, and may have a balloon payment too, so you can check on that. As far as asking for the APR goes, the way that it gets calculated on a new loan is meaningless, because all it does is predict the adjustment based on the current index. Seeing as none of us would know what the real index will be in 5 years, it is never going to be accurate.
2 votes Thank Flag Link Wed Nov 10, 2010
What are you trying to calculate?

1. It CAN adjust UP TO 3%
2. Period? Is it 6 months or 1yr period?
3. What is the index?

Is your ARM about to adjust? That is my best guess.
Then it might go DOWN!!!!

Get a copy of your promissory note and call a professional mortgage banker.... they can walk you thru this and make you understand it in minutes.
1 vote Thank Flag Link Wed Nov 10, 2010
Your lender should be able to break down this for you. it's hard for me to determine from the information you provided.
0 votes Thank Flag Link Thu Nov 11, 2010
Great answer Robin.
Kjo needs the 'index' and 'margin' from the promissory note.
0 votes Thank Flag Link Wed Nov 10, 2010
Although, I got my degree at St. Edward's University in Austin and took many courses in solving these types of problems, I would suggest that you contact a financial advisor and request a good faith estimate from the lender that is providing this type of loan to you. You indicated it would adjust 3 percent per period but did not define what that period is - you did not provide enough information. Thanks

Best of luck to you!

Nanci Z

0 votes Thank Flag Link Wed Nov 10, 2010
Hi Kjo_jao, There is a mortgage calculator on my website that will calculate adjustable rate mortgages. You can find it by clicking the following link:… You just fill in the blanks with your numbers. If that doesn't help, there is a list of good loan officers who will be happy to help. It may make you sign in, but we will just send you a thank you note. Let us know if you need help finding a home.
0 votes Thank Flag Link Wed Nov 10, 2010
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