Adjustable-Rate Mortgage worksheet

1. Highest monthly payment on your index path: $2,687.18

1. Find the payment for the first 48 months. The monthly rate i is 6% ÷ 12, and L is the loan. A standard formula finds the equal payment that clears it in 360 months: L × i ÷ (1 − (1 + i)^−360)

   $\frac{\mathrm{\$400,000.00}\times 0.005}{1-{\left(1+0.005\right)}^{\mathrm{-360}}}$$=\mathrm{\$2,398.20}$

2. At the first reset, in month 49, add the margin to the index, then round to the nearest 0.125

   $\mathrm{3.9\%}+\mathrm{2.2\%}$$=\mathrm{6.125\%}$

3. Keep the rate within the 3-point first cap, the 2.2% floor and the 11% lifetime ceiling. That gives the new rate

   $\text{new rate}$$=\mathrm{6.125\%}$

4. Find the new payment: the $378,458.13 still owed, repaid over the 312 months left at 6.125%

   $\text{payment}$$=\mathrm{\$2,427.51}$

5. The highest payment on your index path, first reached in month 85

   $\text{highest payment}$$=\mathrm{\$2,687.18}$

6. For the worst case, raise the rate by the full cap at each reset (to 9% at the first one), up to the 11% ceiling

   $\mathrm{6\%}+\mathrm{5\%}$$=\mathrm{11\%}$

7. The highest payment in the worst case

   $\text{worst-case payment}$$=\mathrm{\$3,666.46}$

2. Highest monthly payment on your index path: $3,135.65

1. Find the payment for the first 84 months. The monthly rate i is 6% ÷ 12, and L is the loan. A standard formula finds the equal payment that clears it in 360 months: L × i ÷ (1 − (1 + i)^−360)

   $\frac{\mathrm{\$450,000.00}\times 0.005}{1-{\left(1+0.005\right)}^{\mathrm{-360}}}$$=\mathrm{\$2,697.98}$

2. At the first reset, in month 85, add the margin to the index, then round to the nearest 0.125

   $\mathrm{5.5\%}+\mathrm{2.25\%}$$=\mathrm{7.75\%}$

3. Keep the rate within the 2-point first cap, the 2.25% floor and the 10% lifetime ceiling. That gives the new rate

   $\text{new rate}$$=\mathrm{7.75\%}$

4. Find the new payment: the $403,377.24 still owed, repaid over the 276 months left at 7.75%

   $\text{payment}$$=\mathrm{\$3,135.65}$

5. The highest payment on your index path, first reached in month 85

   $\text{highest payment}$$=\mathrm{\$3,135.65}$

6. For the worst case, raise the rate by the full cap at each reset (to 8% at the first one), up to the 10% ceiling

   $\mathrm{6\%}+\mathrm{4\%}$$=\mathrm{10\%}$

7. The highest payment in the worst case

   $\text{worst-case payment}$$=\mathrm{\$3,728.98}$

3. Highest monthly payment on your index path: $1,961.96

1. Find the payment for the first 60 months. The monthly rate i is 6% ÷ 12, and L is the loan. A standard formula finds the equal payment that clears it in 240 months: L × i ÷ (1 − (1 + i)^−240)

   $\frac{\mathrm{\$240,000.00}\times 0.005}{1-{\left(1+0.005\right)}^{\mathrm{-240}}}$$=\mathrm{\$1,719.43}$

2. At the first reset, in month 61, add the margin to the index, then round to the nearest 0.125

   $\mathrm{5\%}+\mathrm{3.1\%}$$=\mathrm{8.125\%}$

3. Keep the rate within the 3-point first cap, the 3.1% floor and the 11% lifetime ceiling. That gives the new rate

   $\text{new rate}$$=\mathrm{8.125\%}$

4. Find the new payment: the $203,759.04 still owed, repaid over the 180 months left at 8.125%

   $\text{payment}$$=\mathrm{\$1,961.96}$

5. The highest payment on your index path, first reached in month 61

   $\text{highest payment}$$=\mathrm{\$1,961.96}$

6. For the worst case, raise the rate by the full cap at each reset (to 9% at the first one), up to the 11% ceiling

   $\mathrm{6\%}+\mathrm{5\%}$$=\mathrm{11\%}$

7. The highest payment in the worst case

   $\text{worst-case payment}$$=\mathrm{\$2,306.61}$

4. Highest monthly payment on your index path: $2,183.95

1. Find the payment for the first 72 months. The monthly rate i is 5% ÷ 12, and L is the loan. A standard formula finds the equal payment that clears it in 180 months: L × i ÷ (1 − (1 + i)^−180)

   $\frac{\mathrm{\$250,000.00}\times 0.00416667}{1-{\left(1+0.00416667\right)}^{\mathrm{-180}}}$$=\mathrm{\$1,976.98}$

2. At the first reset, in month 73, add the margin to the index, then round to the nearest 0.125

   $\mathrm{4.25\%}+\mathrm{2.5\%}$$=\mathrm{6.75\%}$

3. Keep the rate within the 2-point first cap, the 2.5% floor and the 10% lifetime ceiling. That gives the new rate

   $\text{new rate}$$=\mathrm{6.75\%}$

4. Find the new payment: the $171,653.83 still owed, repaid over the 108 months left at 6.75%

   $\text{payment}$$=\mathrm{\$2,125.08}$

5. The highest payment on your index path, first reached in month 91

   $\text{highest payment}$$=\mathrm{\$2,183.95}$

6. For the worst case, raise the rate by the full cap at each reset (to 7% at the first one), up to the 10% ceiling

   $\mathrm{5\%}+\mathrm{5\%}$$=\mathrm{10\%}$

7. The highest payment in the worst case

   $\text{worst-case payment}$$=\mathrm{\$2,389.54}$

5. Highest monthly payment on your index path: $3,343.39

1. Find the payment for the first 60 months. The monthly rate i is 5% ÷ 12, and L is the loan. A standard formula finds the equal payment that clears it in 360 months: L × i ÷ (1 − (1 + i)^−360)

   $\frac{\mathrm{\$500,000.00}\times 0.00416667}{1-{\left(1+0.00416667\right)}^{\mathrm{-360}}}$$=\mathrm{\$2,684.11}$

2. At the first reset, in month 61, add the margin to the index, then round to the nearest 0.125

   $\mathrm{3.5\%}+\mathrm{2.4\%}$$=\mathrm{5.875\%}$

3. Keep the rate within the 2-point first cap, the 2.4% floor and the 9% lifetime ceiling. That gives the new rate

   $\text{new rate}$$=\mathrm{5.875\%}$

4. Find the new payment: the $459,143.66 still owed, repaid over the 300 months left at 5.875%

   $\text{payment}$$=\mathrm{\$2,923.29}$

5. The highest payment on your index path, first reached in month 79

   $\text{highest payment}$$=\mathrm{\$3,343.39}$

6. For the worst case, raise the rate by the full cap at each reset (to 7% at the first one), up to the 9% ceiling

   $\mathrm{5\%}+\mathrm{4\%}$$=\mathrm{9\%}$

7. The highest payment in the worst case

   $\text{worst-case payment}$$=\mathrm{\$3,841.32}$

6. Highest monthly payment on your index path: $2,195.56

1. Find the payment for the first 72 months. The monthly rate i is 7% ÷ 12, and L is the loan. A standard formula finds the equal payment that clears it in 360 months: L × i ÷ (1 − (1 + i)^−360)

   $\frac{\mathrm{\$275,000.00}\times 0.00583333}{1-{\left(1+0.00583333\right)}^{\mathrm{-360}}}$$=\mathrm{\$1,829.58}$

2. At the first reset, in month 73, add the margin to the index, then round to the nearest 0.125

   $\mathrm{3.75\%}+\mathrm{3.2\%}$$=\mathrm{7\%}$

3. Keep the rate within the 2-point first cap, the 3.2% floor and the 13% lifetime ceiling. That gives the new rate

   $\text{new rate}$$=\mathrm{7\%}$

4. Find the new payment: the $254,901.77 still owed, repaid over the 288 months left at 7%

   $\text{payment}$$=\mathrm{\$1,829.58}$

5. The highest payment on your index path, first reached in month 91

   $\text{highest payment}$$=\mathrm{\$2,195.56}$

6. For the worst case, raise the rate by the full cap at each reset (to 9% at the first one), up to the 13% ceiling

   $\mathrm{7\%}+\mathrm{6\%}$$=\mathrm{13\%}$

7. The highest payment in the worst case

   $\text{worst-case payment}$$=\mathrm{\$2,879.15}$

7. Highest monthly payment on your index path: $3,550.04

1. Find the payment for the first 60 months. The monthly rate i is 5% ÷ 12, and L is the loan. A standard formula finds the equal payment that clears it in 180 months: L × i ÷ (1 − (1 + i)^−180)

   $\frac{\mathrm{\$375,000.00}\times 0.00416667}{1-{\left(1+0.00416667\right)}^{\mathrm{-180}}}$$=\mathrm{\$2,965.48}$

2. At the first reset, in month 61, add the margin to the index, then round to the nearest 0.125

   $\mathrm{4\%}+\mathrm{3.2\%}$$=\mathrm{7.25\%}$

3. Keep the rate within the 2-point first cap, the 3.2% floor and the 10% lifetime ceiling. That gives the new rate

   $\text{new rate}$$=\mathrm{7\%}$

4. Find the new payment: the $279,589.09 still owed, repaid over the 120 months left at 7%

   $\text{payment}$$=\mathrm{\$3,246.27}$

5. The highest payment on your index path, first reached in month 79

   $\text{highest payment}$$=\mathrm{\$3,550.04}$

6. For the worst case, raise the rate by the full cap at each reset (to 7% at the first one), up to the 10% ceiling

   $\mathrm{5\%}+\mathrm{5\%}$$=\mathrm{10\%}$

7. The highest payment in the worst case

   $\text{worst-case payment}$$=\mathrm{\$3,654.82}$

8. Highest monthly payment on your index path: $2,915.03

1. Find the payment for the first 60 months. The monthly rate i is 6% ÷ 12, and L is the loan. A standard formula finds the equal payment that clears it in 180 months: L × i ÷ (1 − (1 + i)^−180)

   $\frac{\mathrm{\$325,000.00}\times 0.005}{1-{\left(1+0.005\right)}^{\mathrm{-180}}}$$=\mathrm{\$2,742.53}$

2. At the first reset, in month 61, add the margin to the index, then round to the nearest 0.125

   $\mathrm{4.25\%}+\mathrm{2.5\%}$$=\mathrm{6.75\%}$

3. Keep the rate within the 2-point first cap, the 2.5% floor and the 11% lifetime ceiling. That gives the new rate

   $\text{new rate}$$=\mathrm{6.75\%}$

4. Find the new payment: the $247,029.57 still owed, repaid over the 120 months left at 6.75%

   $\text{payment}$$=\mathrm{\$2,836.50}$

5. The highest payment on your index path, first reached in month 97

   $\text{highest payment}$$=\mathrm{\$2,915.03}$

6. For the worst case, raise the rate by the full cap at each reset (to 8% at the first one), up to the 11% ceiling

   $\mathrm{6\%}+\mathrm{5\%}$$=\mathrm{11\%}$

7. The highest payment in the worst case

   $\text{worst-case payment}$$=\mathrm{\$3,355.29}$

9. Highest monthly payment on your index path: $3,562.25

1. Find the payment for the first 72 months. The monthly rate i is 4% ÷ 12, and L is the loan. A standard formula finds the equal payment that clears it in 240 months: L × i ÷ (1 − (1 + i)^−240)

   $\frac{\mathrm{\$510,000.00}\times 0.00333333}{1-{\left(1+0.00333333\right)}^{\mathrm{-240}}}$$=\mathrm{\$3,090.50}$

2. At the first reset, in month 73, add the margin to the index, then round to the nearest 0.125

   $\mathrm{5.25\%}+\mathrm{2.4\%}$$=\mathrm{7.625\%}$

3. Keep the rate within the 2-point first cap, the 2.4% floor and the 8% lifetime ceiling. That gives the new rate

   $\text{new rate}$$=\mathrm{6\%}$

4. Find the new payment: the $397,060.05 still owed, repaid over the 168 months left at 6%

   $\text{payment}$$=\mathrm{\$3,499.04}$

5. The highest payment on your index path, first reached in month 109

   $\text{highest payment}$$=\mathrm{\$3,562.25}$

6. For the worst case, raise the rate by the full cap at each reset (to 6% at the first one), up to the 8% ceiling

   $\mathrm{4\%}+\mathrm{4\%}$$=\mathrm{8\%}$

7. The highest payment in the worst case

   $\text{worst-case payment}$$=\mathrm{\$3,895.50}$

10. Highest monthly payment on your index path: $3,663.35

1. Find the payment for the first 48 months. The monthly rate i is 6% ÷ 12, and L is the loan. A standard formula finds the equal payment that clears it in 240 months: L × i ÷ (1 − (1 + i)^−240)

   $\frac{\mathrm{\$450,000.00}\times 0.005}{1-{\left(1+0.005\right)}^{\mathrm{-240}}}$$=\mathrm{\$3,223.94}$

2. At the first reset, in month 49, add the margin to the index, then round to the nearest 0.125

   $\mathrm{4\%}+\mathrm{3\%}$$=\mathrm{7\%}$

3. Keep the rate within the 2-point first cap, the 3% floor and the 11% lifetime ceiling. That gives the new rate

   $\text{new rate}$$=\mathrm{7\%}$

4. Find the new payment: the $397,311.97 still owed, repaid over the 192 months left at 7%

   $\text{payment}$$=\mathrm{\$3,445.52}$

5. The highest payment on your index path, first reached in month 61

   $\text{highest payment}$$=\mathrm{\$3,663.35}$

6. For the worst case, raise the rate by the full cap at each reset (to 8% at the first one), up to the 11% ceiling

   $\mathrm{6\%}+\mathrm{5\%}$$=\mathrm{11\%}$

7. The highest payment in the worst case

   $\text{worst-case payment}$$=\mathrm{\$4,371.39}$