# 740 by fanzhongqing

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```									                                                                                         Pay Option ARM
Calculator
Step 1:      Pick index, loan amount, line of pricing
1 - Month      LIBOR        Loan Amt         \$100,000                                     Enter data in yellow highlighted areas
LTV                      80 %

Step 2:       Identify index, margin, fully indexed rate (F.I.R)*
LIBOR             4.750% +
Margin            3.500% +
F.I.R*             =           8.250%                    Low Rate

Step 3:      Identify the payment options, how to calculate, and get value
1 Minimum Monthly Payment (start rate)                         1.000%     Payment \$     \$321.64               Low Payment
2 Interest Only (Loan Amt x FIR /365 x 30)                                Payment \$     \$687.50
3 Principle and Interest 30 yr term (Based on FIR)                        Payment \$     \$751.27                                       \$429.54
4 Principle and Interest 15 yr term (Based on FIR)                        Payment \$     \$970.14                                       Year 5
* Deferred Interest may occur when Minimum Payment is exercised and Interest Only option is larger.
\$399.57
Step 4:      Calculate max monthly w/payment cap                                                                        Year 4
Year 1       Base of minimum payment                          \$321.64
Year 2            \$321.64          x          1.075           \$345.76                                   \$371.69
Year 3            \$345.76          x          1.075           \$371.69                                   Year 3
Year 4            \$371.69          x          1.075           \$399.57
Year 5            \$399.57          x          1.075           \$429.54                  \$345.76
Year 2
Step 5:      Compare to a preferred first mortgage product
5/1 ARM         5.250%        Monthly Payment                \$552.20     \$321.64
Option 3 Payment above                                        \$751.27     Year 1
Savings:         -\$199.06
Great Savings
Savings if making Minimum Payment:                      \$230.56

```
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