Adjustable Rate Mortgages (ARMs)

An adjustable rate mortgage is a loan whose interest rate varies during the repayment term. These types of loans are most often found in the real estate market, hence their name. In this chapter, we will refer to adjustable rate mortgages as ARMs.

Sample Request

The following example is a request for an ARM loan with proceeds of $10,000, interest will accrue at a teaser rate of 4.0% for a term of 12 months, after which the rate will adjust annually to the index + margin of 8.0%, with a maximum annual rate increase of 2.0%. The interest accrual method requested is unit period / 365 U. S. Rule accrual method (accrual code 302).

{
  "Module" : "Arm",
  "Data" : {
    "CalcType" : "Payments",
    "LoanDate" : "2022-11-15",
    "PmtDate" : "2023-01-01",
    "Proceeds" : "10000.00",
    "Term" : "120",
    "PPY" : "monthly",
    "TeaserTerm" : "12",
    "TeaserRate" : "4.000",
    "Index" : "6.00",
    "Margin" : "2.00",
    "TermStep" : "12",
    "AnnualRateIncrease" : "2.00",
    "Settings" : {
      "AccrualCode" : "302"
    }
  }
}

Sample Response

The following example is the response returned from the SCE for the request provided at the beginning of the previous section.

{
  "Result" : 200,
  "Module" : "Arm",
  "Data" : {
    "Errors" : [
    ],
    "Warnings" : [
    ],
    "Results" : {
      "Number of Groups" : "3"
    },
    "FedBox" : {
      "AmtFin" : "10000.00",
      "FinChg" : "3930.08",
      "TotPmts" : "13930.08",
      "APR" : {
        "Value" : "6.778",
        "Type" : "Actuarial"
      }
    },
    "Moneys" : {
      "Principal" : "10000.00",
      "Interest" : "3930.08"
    },
    "Accrual" : {
      "Method" : "Unit Period 365 US Rule",
      "Days1Pmt" : "47",
      "DayCount" : "Actual",
      "Maturity" : "2032-12-01"
    },
    "PmtStreams" : [
      {
        "Term" : "12",
        "Pmt" : "101.43",
        "Rate" : "4.000",
        "Begin" : "2023-01-01"
      },
      {
        "Term" : "12",
        "Pmt" : "110.29",
        "Rate" : "6.000",
        "Begin" : "2024-01-01"
      },
      {
        "Term" : "96",
        "Pmt" : "118.64",
        "Rate" : "8.000",
        "Begin" : "2025-01-01"
      }
    ],
    "AmTable" : {
      "GrandTotals" : {
        "PmtTot" : "13930.08",
        "IntTot" : "3930.68",
        "PrinTot" : "9999.40"
      },
      "SubTotals" : [
        {
          "Year" : "2023",
          "Start" : "1",
          "Events" : "12",
          "PmtSub" : "1217.16",
          "IntSub" : "403.71",
          "PrinSub" : "813.45"
        },
        ...,
        {
          "Year" : "2032",
          "Start" : "109",
          "Events" : "12",
          "PmtSub" : "1423.68",
          "IntSub" : "59.89",
          "PrinSub" : "1363.79"
        }
      ],
      "AmLines" : [
        {
          "Idx" : "1",
          "Date" : "2023-01-01",
          "BegBal" : "10000.00",
          "Pmt" : "101.43",
          "Int" : "51.51",
          "Prin" : "49.92",
          "EndBal" : "9950.08"
        },
        {
          "Idx" : "2",
          "Date" : "2023-02-01",
          "BegBal" : "9950.08",
          "Pmt" : "101.43",
          "Int" : "33.17",
          "Prin" : "68.26",
          "EndBal" : "9881.82"
        },
        ...,
        {
          "Idx" : "120",
          "Date" : "2032-12-01",
          "BegBal" : "118.45",
          "Pmt" : "118.64",
          "Int" : "0.79",
          "Prin" : "117.85",
          "EndBal" : "0.60"
        }
      ]
    }
  }
}