Calculated Industries 43285 - Manual (Page 36)

Adjustable Rate Mortgages
Using the [ARM] key, you can quickly and simply find the “adjust-
ed” payments for future years on fully and partially amortized
Adjustable Rate Mortgages. Here are some notes on solving ARM
loan using this calculator:
1. You solve the initial ARM payment just as you would for
any standard fixed-rate loan — the ARM function is only
used for “adjusted” periods.
2. The “split” Interest [:] Term Adjustment entry for ARM
should always be entered on an annual basis. This value is
permanently stored in memory.
3. After performing an ARM calculation, your permanently
stored values for Term and Interest will be changed, since
performing an ARM alters these values.
4. To calculate a “decreasing ARM,” enter the two ARM para-
meters, but press the [Set] key before pressing [ARM].
5. The calculator includes a “lifetime cap” (i.e., the maximum
amount the interest rate may increase over the life of a
loan). Prior to setting your ARM parameters, key in the
maximum lifetime interest increase followed by the [ARM
Cap] key. This permanently sets the lifetime cap. To restore
the cap to “0,” enter 0 [ARM Cap].
ARM Payment — Worst-Case Scenario
Find the initial monthly payment on a 30-year, $176,000 mort-
gage at 8.25% annual interest rate, and then find the second
and third year’s “worst-case” adjusted payments if this ARM
loan increases 1% at the end of each year. Then, find the
remaining loan balance, term, and current interest rate.
Steps Keystrokes Display
Clear calculator [On/C] [On/C] 0.00
Enter loan amount 176,000 [L/A] 176,000.00
Enter term in years 30 [Term] 30.00
Enter annual interest 8.25 [Int] 8.25
35 – User’s Guide