Using the Adjustable Mortgage Guide

Using the Adjustable Mortgage Guide

Click the Adjustable mortgage button from the guide screen. The Adjustable mortgage dialog window is displayed as shown below with its standard defaults. This guide's assumptions are listed in the box above the input fields; it will setup a worst case scenario adjustable mortgage loan.

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Adjustable mortgage dialog input fields

Note: Use [Tab] to move from field to field or click within each field.

  • Start date The start date defaults to the current date. Click in the Start date field and enter a date or click the Calendar button and select the desired date. (See Date shortcuts.)
  • Loan amount Type the dollar amount of the loan. For this example 300K (for 300,000.00) was entered. (See Amount shortcuts.)
  • Loan term (in years) The drop-down list has 2 options: 15 or 30 years. You can choose an option from the drop-down list or type 15 or 30 in the Loan term field. For this example 30 (for 30 years) was entered.
  • ARM type The drop-down list has 3 options: 3/1, 5/1, or 7/1. You can choose an option from the drop-down list or type 3, 5, or 7 in the ARM type field. For this example, 5 was entered (for 5/1 ARM) as the loan calls for 5 years of payments at the same interest rate before the first adjustment followed by an adjustment every 1 year after. (A 7/1 ARM would show payments with the same interest rate for 7 years before the first adjustment followed by an adjustment every 1 year after.)
  • Starting interest rate This is a percent field where the initial/beginning interest rate of the loan should be entered. For this example 3 was entered (for 3%).
  • Rate cap This is a percent field where the maximum interest rate for the loan should be entered. For this example 11 was entered (for 11%).
  • Max rate increase per year This is a percent field where the maximum percentage increase per year should be entered. For this example 1 was entered as the loan allows for a rate increase of 1% per year until the Rate cap is met or the term of the loan is complete.
  • Create Builds the cash flow based on all entered data.

The pre-populated Cash Flow Data window should now appear as shown below. The cash flow can be further adjusted to fit your specific adjustable mortgage scenario.

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Cash Flow Data fields

  • Label field includes the name of the guide used. (See Edit the Label field.)
  • Compounding Period is set to Monthly per this guide's assumptions.
  • Nominal Annual Rate is set to the Starting interest rate of 3%.
  • The calculation settings per this guide's assumptions (Normal amortization and a 365 day year) are displayed at the bottom left. You can click on the displayed settings to quickly access the Calculations group on the Configuration ribbon where you can change these settings.

Cash Flow Matrix fields

  • Start date The Date in the Loan Event (line 1).
  • Loan amount The Amount of loan - 300,000.00 - in the Loan Event's Points & Fees details box (line 1). (See Entering Points & Fees.)
  • Loan term (in years) Add up the Number fields of each Payment Event (lines 2 through 18) = 360 (30 years).
  • ARM type Payment Event on line 2: 60 monthly payments (5 years) at a Nominal Annual Rate (Starting interest rate) of 3% followed by a Rate Change Event every 12 months (1 year) with a 1% Rate increase (Max rate increase per year) until the Rate gets to 11% (Rate cap).