Posted on: 16th Aug, 2010 12:07 pm
I have a foreign (I'm in the USA) friend who, in his country, has an ARM. The mortgage company allows him to pay additional principal to A) lower the monthly payment for all subsequent adjustment periods, similar to an ARM here in the USA (granted the payment may adjust upwards if the rate increases) or B) reduce the number of years over which the loan will be paid back. Option B is similar to reducing the years on a fixed rate loan, but I've not been able to find the formulas used to calculate the number of years/months by which the ARM would be reduced using option B. Furthermore, I've only seen articles (most referencing loans in the USA, not foreign ones) mentioning that an ARM can only pay additional principal via option A. Anyone know anything about this, or know where to find these formulas? Just to be clear, I do NOT need the formulas for a fixed rate loan. I can calculate this for a fixed rate loan—the frustration is in applying it to an adjustable rate loan. Any help is appreciated!
Hi Guest!
Welcome to forums!
As far as I can understand, the calculations and the rules regarding ARM refinancing will depend upon the laws and regulation of the country in which your friend has the ARM. He or she needs to contact the lender and discuss the matter with him. The lender will guide him and let him know more about the calculations.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
As far as I can understand, the calculations and the rules regarding ARM refinancing will depend upon the laws and regulation of the country in which your friend has the ARM. He or she needs to contact the lender and discuss the matter with him. The lender will guide him and let him know more about the calculations.
Feel free to ask if you've further queries.
Sussane