U
SER’S GUIDE — 51
Adjustable Rate Mortgages
Using the A key, you can quickly find the “adjusted” (increasing or
decreasing) payments for future years on fully and partially amor-
tized Adjustable Rate Mortgages. Here are some notes on Solving
ARM loans 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 ARMs should
be entered on an annual basis (although you can also enter a
6-month adjustment term as .5). 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 parame-
ters, but press the s key before pressing A.
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 life-
time interest increase followed by s %. This permanently sets
the lifetime cap. To restore the cap to “0” enter 0 s %.
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