Mortgages and Amortization 37
BEAR-CH1.DOC BA Real Estate Guidebook Jackie Quiram Revised: 09/28/99 1:16 PM Printed: 09/28/99 1:16 PM
Page 37 of 36
Steps
Keystrokes
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Calculate monthly
savings/costs by
subtracting amount of
second period ARM
payment from fixed-rate
payment.
]
3
t
X
960.21
j
53.65
Multiply monthly
savings/costs by number
of months in this ARM
period.
O
12
j
643.81
Add to stored
savings/costs and store.
a
]
gj
T
g
MEM=
3,469.46
Calculate monthly
savings/costs by
subtracting amount of
third period ARM
payment from fixed-rate
payment
]
3
t
X
1153.34
j
-
139.48
Multiply monthly
savings/costs by number
of months in this ARM
period.
O
12
j
-
1,673.75
Add to stored savings
and store.
a
]
g
j
T
g
MEM=
1,795.72
Continue the comparison until the accumulated savings in
the last column are reduced to or below zero. That is the
breakeven point in the comparison. Once it is apparent
that the savings will be exhausted in a given year, divide
the monthly costs into the previous year’s total savings.
This will tell you how many months will occur during that
period before the savings are exhausted. (See lines 19 to
22 in the worksheet example on page 39.)
ARM vs. Fixed-
Rate Mortgage
