Mortgages and Amortization 33
BEAR-CH1.DOC BA Real Estate Guidebook Jackie Quiram Revised: 09/28/99 1:16 PM Printed: 09/28/99 1:16 PM
Page 33 of 36
Press
#
,
until the BGN indicator disappears.
Steps
Keystrokes
Display
Clear TVM values.
#
-
0.00
Set P/Y and C/Y to 12.
#
+
12
j
j
P/Y =
12.00
C/Y =
12.00
12.00
Enter the loan
values.
30
0
6
1
100
q
2
TRM=
30.00
I% =
6.00
LN = 100,000.00
Start ARM and
accept initial P1.
M
j
P1 =
1.00
P2 =
1.00
Change P2 to 12 and
show previous I%.
12
j
P2 =
12.00
I% =
6.00
Show PMT and BAL
for first year.
j
j
PMT=
-
599.55
BAL=
98,772.00
Accept range for
second year and
show previous I%.
j
j
j
P1 =
13.00
P2 =
24.00
I% =
6.00
Increase I% by 2%;
show PMT and BAL
for second year.
8
j
j
I% =
8.00
PMT=
-
730.86
BAL=
97,870.87
Accept range for
third year and show
previous I%.
j
j
j
P1 =
25.00
P2 =
36.00
I% =
8.00
Increase I% by 2%;
show PMT and BAL
for third year.
10
j
j
I% =
10.00
PMT=
-
869.05
BAL=
97,199.12
(continued)
Finding Periodic Payments for an ARM
A bank is lending $100,000 on an adjustable rate, 30-year
mortgage at 6% annual interest with an annual cap on the
interest rate of 2% and a lifetime cap of 6%. Find the
payment amount for each adjustment period assuming it
accelerates by the maximum amount at each adjustment
period.
Solution
