5/25 Adjustable Rate Mortgage - Example

A 5/25 is often a subprime mortgage that may have higher rates and depending on where you live may have a prepayment penalty. The 5 refers to the number of years that the loan is fixed while the 25 refers to the number of years that the loan is adjustable after that. So a 5/25 mortgage is usually due in 30 years. Typically they may adjust every 6 months after the initial fixed period expires.

In this example, we look at 5/25 mortgage for $220,000 with a starting interest rate of 8.5%. It has a 3% cap on the first adjustment and a 1% cap on each additional adjustment. It has a minimum interest rate equal to the start rate and a lifetime maximum interest rate of 14.5%. The index and margin are 5.34% and 3.25% respectively.

Use the mortgage calculator to explore how your interest rate, payment, and principal balance can change.

Adjustable Rate Calculator
Note that the fully indexed rate (i.e. index plus margin) is more than the start rate so even if the index rate remains stable the interest rate will increase after two years. In this case you would end up paying $392,807 in total interest.
 Stable
MonthInterest
Rate
Index
Rate
Payment Interest Principal Balance
18.500%5.340%$1,692$1,558$133$219,867
28.500%5.340%$1,692$1,557$134$219,732
38.500%5.340%$1,692$1,556$135$219,597
48.500%5.340%$1,692$1,555$136$219,461
58.500%5.340%$1,692$1,555$137$219,324
68.500%5.340%$1,692$1,554$138$219,186
78.500%5.340%$1,692$1,553$139$219,047
88.500%5.340%$1,692$1,552$140$218,907
98.500%5.340%$1,692$1,551$141$218,766
108.500%5.340%$1,692$1,550$142$218,624
118.500%5.340%$1,692$1,549$143$218,481
128.500%5.340%$1,692$1,548$144$218,337
Year 1  $20,299$18,636$1,663 
138.500%5.340%$1,692$1,547$145$218,192
148.500%5.340%$1,692$1,546$146$218,046
158.500%5.340%$1,692$1,544$147$217,899
168.500%5.340%$1,692$1,543$148$217,750
178.500%5.340%$1,692$1,542$149$217,601
188.500%5.340%$1,692$1,541$150$217,451
198.500%5.340%$1,692$1,540$151$217,300
208.500%5.340%$1,692$1,539$152$217,147
218.500%5.340%$1,692$1,538$153$216,994
228.500%5.340%$1,692$1,537$155$216,839
238.500%5.340%$1,692$1,536$156$216,684
248.500%5.340%$1,692$1,535$157$216,527
Year 2  $20,299$18,489$1,810 
258.500%5.340%$1,692$1,534$158$216,369
268.500%5.340%$1,692$1,533$159$216,210
278.500%5.340%$1,692$1,531$160$216,050
288.500%5.340%$1,692$1,530$161$215,888
298.500%5.340%$1,692$1,529$162$215,726
308.500%5.340%$1,692$1,528$164$215,563
318.500%5.340%$1,692$1,527$165$215,398
328.500%5.340%$1,692$1,526$166$215,232
338.500%5.340%$1,692$1,525$167$215,065
348.500%5.340%$1,692$1,523$168$214,897
358.500%5.340%$1,692$1,522$169$214,727
368.500%5.340%$1,692$1,521$171$214,557
Year 3  $20,299$18,329$1,970 
378.500%5.340%$1,692$1,520$172$214,385
388.500%5.340%$1,692$1,519$173$214,212
398.500%5.340%$1,692$1,517$174$214,037
408.500%5.340%$1,692$1,516$176$213,862
418.500%5.340%$1,692$1,515$177$213,685
428.500%5.340%$1,692$1,514$178$213,507
438.500%5.340%$1,692$1,512$179$213,328
448.500%5.340%$1,692$1,511$181$213,147
458.500%5.340%$1,692$1,510$182$212,966
468.500%5.340%$1,692$1,509$183$212,782
478.500%5.340%$1,692$1,507$184$212,598
488.500%5.340%$1,692$1,506$186$212,412
Year 4  $20,299$18,155$2,144 
498.500%5.340%$1,692$1,505$187$212,225
508.500%5.340%$1,692$1,503$188$212,037
518.500%5.340%$1,692$1,502$190$211,847
528.500%5.340%$1,692$1,501$191$211,656
538.500%5.340%$1,692$1,499$192$211,464
548.500%5.340%$1,692$1,498$194$211,270
558.500%5.340%$1,692$1,496$195$211,075
568.500%5.340%$1,692$1,495$196$210,879
578.500%5.340%$1,692$1,494$198$210,681
588.500%5.340%$1,692$1,492$199$210,481
598.500%5.340%$1,692$1,491$201$210,281
608.500%5.340%$1,692$1,489$202$210,079
Year 5  $20,299$17,966$2,334 
618.590%5.340%$1,704$1,504$201$209,878
628.590%5.340%$1,704$1,502$202$209,676
638.590%5.340%$1,704$1,501$203$209,473
648.590%5.340%$1,704$1,499$205$209,268
658.590%5.340%$1,704$1,498$206$209,061
668.590%5.340%$1,704$1,497$208$208,853
678.590%5.340%$1,704$1,495$209$208,644
688.590%5.340%$1,704$1,494$211$208,433
698.590%5.340%$1,704$1,492$212$208,221
708.590%5.340%$1,704$1,491$214$208,007
718.590%5.340%$1,704$1,489$215$207,792
728.590%5.340%$1,704$1,487$217$207,575
Year 6  $20,452$17,949$2,504 
738.590%5.340%$1,704$1,486$218$207,356
748.590%5.340%$1,704$1,484$220$207,136
758.590%5.340%$1,704$1,483$222$206,915
768.590%5.340%$1,704$1,481$223$206,691
778.590%5.340%$1,704$1,480$225$206,467
788.590%5.340%$1,704$1,478$226$206,240
798.590%5.340%$1,704$1,476$228$206,012
808.590%5.340%$1,704$1,475$230$205,783
818.590%5.340%$1,704$1,473$231$205,551
828.590%5.340%$1,704$1,471$233$205,318
838.590%5.340%$1,704$1,470$235$205,084
848.590%5.340%$1,704$1,468$236$204,847
Year 7  $20,452$17,725$2,727 
858.590%5.340%$1,704$1,466$238$204,609
868.590%5.340%$1,704$1,465$240$204,370
878.590%5.340%$1,704$1,463$241$204,128
888.590%5.340%$1,704$1,461$243$203,885
898.590%5.340%$1,704$1,459$245$203,640
908.590%5.340%$1,704$1,458$247$203,394
918.590%5.340%$1,704$1,456$248$203,145
928.590%5.340%$1,704$1,454$250$202,895
938.590%5.340%$1,704$1,452$252$202,643
948.590%5.340%$1,704$1,451$254$202,389
958.590%5.340%$1,704$1,449$256$202,134
968.590%5.340%$1,704$1,447$257$201,876
Year 8  $20,452$17,481$2,971 
978.590%5.340%$1,704$1,445$259$201,617
988.590%5.340%$1,704$1,443$261$201,356
998.590%5.340%$1,704$1,441$263$201,093
1008.590%5.340%$1,704$1,439$265$200,828
1018.590%5.340%$1,704$1,438$267$200,561
1028.590%5.340%$1,704$1,436$269$200,292
1038.590%5.340%$1,704$1,434$271$200,022
1048.590%5.340%$1,704$1,432$273$199,749
1058.590%5.340%$1,704$1,430$274$199,475
1068.590%5.340%$1,704$1,428$276$199,198
1078.590%5.340%$1,704$1,426$278$198,920
1088.590%5.340%$1,704$1,424$280$198,639
Year 9  $20,452$17,216$3,237 
1098.590%5.340%$1,704$1,422$282$198,357
1108.590%5.340%$1,704$1,420$284$198,072
1118.590%5.340%$1,704$1,418$286$197,786
1128.590%5.340%$1,704$1,416$289$197,497
1138.590%5.340%$1,704$1,414$291$197,207
1148.590%5.340%$1,704$1,412$293$196,914
1158.590%5.340%$1,704$1,410$295$196,619
1168.590%5.340%$1,704$1,407$297$196,322
1178.590%5.340%$1,704$1,405$299$196,023
1188.590%5.340%$1,704$1,403$301$195,722
1198.590%5.340%$1,704$1,401$303$195,419
1208.590%5.340%$1,704$1,399$306$195,113
Year 10  $20,452$16,926$3,526 
1218.590%5.340%$1,704$1,397$308$194,806
1228.590%5.340%$1,704$1,394$310$194,496
1238.590%5.340%$1,704$1,392$312$194,184
1248.590%5.340%$1,704$1,390$314$193,869
1258.590%5.340%$1,704$1,388$317$193,553
1268.590%5.340%$1,704$1,386$319$193,234
1278.590%5.340%$1,704$1,383$321$192,913
1288.590%5.340%$1,704$1,381$323$192,589
1298.590%5.340%$1,704$1,379$326$192,264
1308.590%5.340%$1,704$1,376$328$191,936
1318.590%5.340%$1,704$1,374$330$191,605
1328.590%5.340%$1,704$1,372$333$191,272
Year 11  $20,452$16,611$3,841 
1338.590%5.340%$1,704$1,369$335$190,937
1348.590%5.340%$1,704$1,367$338$190,600
1358.590%5.340%$1,704$1,364$340$190,260
1368.590%5.340%$1,704$1,362$342$189,917
1378.590%5.340%$1,704$1,359$345$189,572
1388.590%5.340%$1,704$1,357$347$189,225
1398.590%5.340%$1,704$1,355$350$188,875
1408.590%5.340%$1,704$1,352$352$188,523
1418.590%5.340%$1,704$1,350$355$188,168
1428.590%5.340%$1,704$1,347$357$187,810
1438.590%5.340%$1,704$1,344$360$187,450
1448.590%5.340%$1,704$1,342$363$187,088
Year 12  $20,452$16,268$4,184 
1458.590%5.340%$1,704$1,339$365$186,723
1468.590%5.340%$1,704$1,337$368$186,355
1478.590%5.340%$1,704$1,334$370$185,985
1488.590%5.340%$1,704$1,331$373$185,612
1498.590%5.340%$1,704$1,329$376$185,236
1508.590%5.340%$1,704$1,326$378$184,858
1518.590%5.340%$1,704$1,323$381$184,476
1528.590%5.340%$1,704$1,321$384$184,093
1538.590%5.340%$1,704$1,318$387$183,706
1548.590%5.340%$1,704$1,315$389$183,317
1558.590%5.340%$1,704$1,312$392$182,925
1568.590%5.340%$1,704$1,309$395$182,530
Year 13  $20,452$15,894$4,558 
1578.590%5.340%$1,704$1,307$398$182,132
1588.590%5.340%$1,704$1,304$401$181,731
1598.590%5.340%$1,704$1,301$403$181,328
1608.590%5.340%$1,704$1,298$406$180,921
1618.590%5.340%$1,704$1,295$409$180,512
1628.590%5.340%$1,704$1,292$412$180,100
1638.590%5.340%$1,704$1,289$415$179,685
1648.590%5.340%$1,704$1,286$418$179,267
1658.590%5.340%$1,704$1,283$421$178,846
1668.590%5.340%$1,704$1,280$424$178,421
1678.590%5.340%$1,704$1,277$427$177,994
1688.590%5.340%$1,704$1,274$430$177,564
Year 14  $20,452$15,487$4,966 
1698.590%5.340%$1,704$1,271$433$177,131
1708.590%5.340%$1,704$1,268$436$176,694
1718.590%5.340%$1,704$1,265$440$176,255
1728.590%5.340%$1,704$1,262$443$175,812
1738.590%5.340%$1,704$1,259$446$175,366
1748.590%5.340%$1,704$1,255$449$174,917
1758.590%5.340%$1,704$1,252$452$174,465
1768.590%5.340%$1,704$1,249$455$174,009
1778.590%5.340%$1,704$1,246$459$173,551
1788.590%5.340%$1,704$1,242$462$173,089
1798.590%5.340%$1,704$1,239$465$172,623
1808.590%5.340%$1,704$1,236$469$172,155
Year 15  $20,452$15,043$5,409 
1818.590%5.340%$1,704$1,232$472$171,683
1828.590%5.340%$1,704$1,229$475$171,207
1838.590%5.340%$1,704$1,226$479$170,728
1848.590%5.340%$1,704$1,222$482$170,246
1858.590%5.340%$1,704$1,219$486$169,760
1868.590%5.340%$1,704$1,215$489$169,271
1878.590%5.340%$1,704$1,212$493$168,779
1888.590%5.340%$1,704$1,208$496$168,282
1898.590%5.340%$1,704$1,205$500$167,783
1908.590%5.340%$1,704$1,201$503$167,279
1918.590%5.340%$1,704$1,197$507$166,772
1928.590%5.340%$1,704$1,194$511$166,262
Year 16  $20,452$14,560$5,893 
1938.590%5.340%$1,704$1,190$514$165,748
1948.590%5.340%$1,704$1,186$518$165,230
1958.590%5.340%$1,704$1,183$522$164,708
1968.590%5.340%$1,704$1,179$525$164,183
1978.590%5.340%$1,704$1,175$529$163,654
1988.590%5.340%$1,704$1,171$533$163,121
1998.590%5.340%$1,704$1,168$537$162,584
2008.590%5.340%$1,704$1,164$541$162,044
2018.590%5.340%$1,704$1,160$544$161,499
2028.590%5.340%$1,704$1,156$548$160,951
2038.590%5.340%$1,704$1,152$552$160,399
2048.590%5.340%$1,704$1,148$556$159,842
Year 17  $20,452$14,033$6,419 
2058.590%5.340%$1,704$1,144$560$159,282
2068.590%5.340%$1,704$1,140$564$158,718
2078.590%5.340%$1,704$1,136$568$158,150
2088.590%5.340%$1,704$1,132$572$157,578
2098.590%5.340%$1,704$1,128$576$157,001
2108.590%5.340%$1,704$1,124$580$156,421
2118.590%5.340%$1,704$1,120$585$155,836
2128.590%5.340%$1,704$1,116$589$155,247
2138.590%5.340%$1,704$1,111$593$154,654
2148.590%5.340%$1,704$1,107$597$154,057
2158.590%5.340%$1,704$1,103$602$153,455
2168.590%5.340%$1,704$1,098$606$152,849
Year 18  $20,452$13,459$6,993 
2178.590%5.340%$1,704$1,094$610$152,239
2188.590%5.340%$1,704$1,090$615$151,625
2198.590%5.340%$1,704$1,085$619$151,006
2208.590%5.340%$1,704$1,081$623$150,382
2218.590%5.340%$1,704$1,076$628$149,754
2228.590%5.340%$1,704$1,072$632$149,122
2238.590%5.340%$1,704$1,067$637$148,485
2248.590%5.340%$1,704$1,063$641$147,844
2258.590%5.340%$1,704$1,058$646$147,198
2268.590%5.340%$1,704$1,054$651$146,547
2278.590%5.340%$1,704$1,049$655$145,892
2288.590%5.340%$1,704$1,044$660$145,232
Year 19  $20,452$12,834$7,618 
2298.590%5.340%$1,704$1,040$665$144,567
2308.590%5.340%$1,704$1,035$670$143,897
2318.590%5.340%$1,704$1,030$674$143,223
2328.590%5.340%$1,704$1,025$679$142,544
2338.590%5.340%$1,704$1,020$684$141,860
2348.590%5.340%$1,704$1,015$689$141,171
2358.590%5.340%$1,704$1,011$694$140,477
2368.590%5.340%$1,704$1,006$699$139,778
2378.590%5.340%$1,704$1,001$704$139,075
2388.590%5.340%$1,704$996$709$138,366
2398.590%5.340%$1,704$990$714$137,652
2408.590%5.340%$1,704$985$719$136,933
Year 20  $20,452$12,154$8,299 
2418.590%5.340%$1,704$980$724$136,209
2428.590%5.340%$1,704$975$729$135,479
2438.590%5.340%$1,704$970$735$134,745
2448.590%5.340%$1,704$965$740$134,005
2458.590%5.340%$1,704$959$745$133,260
2468.590%5.340%$1,704$954$750$132,509
2478.590%5.340%$1,704$949$756$131,754
2488.590%5.340%$1,704$943$761$130,992
2498.590%5.340%$1,704$938$767$130,226
2508.590%5.340%$1,704$932$772$129,453
2518.590%5.340%$1,704$927$778$128,676
2528.590%5.340%$1,704$921$783$127,892
Year 21  $20,452$11,412$9,040 
2538.590%5.340%$1,704$916$789$127,104
2548.590%5.340%$1,704$910$795$126,309
2558.590%5.340%$1,704$904$800$125,509
2568.590%5.340%$1,704$898$806$124,703
2578.590%5.340%$1,704$893$812$123,891
2588.590%5.340%$1,704$887$818$123,074
2598.590%5.340%$1,704$881$823$122,250
2608.590%5.340%$1,704$875$829$121,421
2618.590%5.340%$1,704$869$835$120,586
2628.590%5.340%$1,704$863$841$119,745
2638.590%5.340%$1,704$857$847$118,897
2648.590%5.340%$1,704$851$853$118,044
Year 22  $20,452$10,604$9,848 
2658.590%5.340%$1,704$845$859$117,185
2668.590%5.340%$1,704$839$866$116,319
2678.590%5.340%$1,704$833$872$115,448
2688.590%5.340%$1,704$826$878$114,570
2698.590%5.340%$1,704$820$884$113,685
2708.590%5.340%$1,704$814$891$112,795
2718.590%5.340%$1,704$807$897$111,898
2728.590%5.340%$1,704$801$903$110,995
2738.590%5.340%$1,704$795$910$110,085
2748.590%5.340%$1,704$788$916$109,168
2758.590%5.340%$1,704$781$923$108,245
2768.590%5.340%$1,704$775$930$107,316
Year 23  $20,452$9,724$10,728 
2778.590%5.340%$1,704$768$936$106,380
2788.590%5.340%$1,704$762$943$105,437
2798.590%5.340%$1,704$755$950$104,487
2808.590%5.340%$1,704$748$956$103,531
2818.590%5.340%$1,704$741$963$102,568
2828.590%5.340%$1,704$734$970$101,597
2838.590%5.340%$1,704$727$977$100,620
2848.590%5.340%$1,704$720$984$99,636
2858.590%5.340%$1,704$713$991$98,645
2868.590%5.340%$1,704$706$998$97,647
2878.590%5.340%$1,704$699$1,005$96,641
2888.590%5.340%$1,704$692$1,013$95,629
Year 24  $20,452$8,765$11,687 
2898.590%5.340%$1,704$685$1,020$94,609
2908.590%5.340%$1,704$677$1,027$93,582
2918.590%5.340%$1,704$670$1,034$92,547
2928.590%5.340%$1,704$662$1,042$91,506
2938.590%5.340%$1,704$655$1,049$90,456
2948.590%5.340%$1,704$648$1,057$89,399
2958.590%5.340%$1,704$640$1,064$88,335
2968.590%5.340%$1,704$632$1,072$87,263
2978.590%5.340%$1,704$625$1,080$86,183
2988.590%5.340%$1,704$617$1,087$85,096
2998.590%5.340%$1,704$609$1,095$84,001
3008.590%5.340%$1,704$601$1,103$82,897
Year 25  $20,452$7,721$12,731 
3018.590%5.340%$1,704$593$1,111$81,787
3028.590%5.340%$1,704$585$1,119$80,668
3038.590%5.340%$1,704$577$1,127$79,541
3048.590%5.340%$1,704$569$1,135$78,406
3058.590%5.340%$1,704$561$1,143$77,263
3068.590%5.340%$1,704$553$1,151$76,111
3078.590%5.340%$1,704$545$1,160$74,952
3088.590%5.340%$1,704$537$1,168$73,784
3098.590%5.340%$1,704$528$1,176$72,608
3108.590%5.340%$1,704$520$1,185$71,423
3118.590%5.340%$1,704$511$1,193$70,230
3128.590%5.340%$1,704$503$1,202$69,028
Year 26  $20,452$6,583$13,869 
3138.590%5.340%$1,704$494$1,210$67,818
3148.590%5.340%$1,704$485$1,219$66,599
3158.590%5.340%$1,704$477$1,228$65,372
3168.590%5.340%$1,704$468$1,236$64,135
3178.590%5.340%$1,704$459$1,245$62,890
3188.590%5.340%$1,704$450$1,254$61,636
3198.590%5.340%$1,704$441$1,263$60,373
3208.590%5.340%$1,704$432$1,272$59,100
3218.590%5.340%$1,704$423$1,281$57,819
3228.590%5.340%$1,704$414$1,290$56,529
3238.590%5.340%$1,704$405$1,300$55,229
3248.590%5.340%$1,704$395$1,309$53,920
Year 27  $20,452$5,344$15,109 
3258.590%5.340%$1,704$386$1,318$52,601
3268.590%5.340%$1,704$377$1,328$51,274
3278.590%5.340%$1,704$367$1,337$49,936
3288.590%5.340%$1,704$357$1,347$48,589
3298.590%5.340%$1,704$348$1,357$47,233
3308.590%5.340%$1,704$338$1,366$45,867
3318.590%5.340%$1,704$328$1,376$44,490
3328.590%5.340%$1,704$318$1,386$43,105
3338.590%5.340%$1,704$309$1,396$41,709
3348.590%5.340%$1,704$299$1,406$40,303
3358.590%5.340%$1,704$288$1,416$38,887
3368.590%5.340%$1,704$278$1,426$37,461
Year 28  $20,452$3,994$16,459 
3378.590%5.340%$1,704$268$1,436$36,025
3388.590%5.340%$1,704$258$1,446$34,578
3398.590%5.340%$1,704$248$1,457$33,122
3408.590%5.340%$1,704$237$1,467$31,654
3418.590%5.340%$1,704$227$1,478$30,176
3428.590%5.340%$1,704$216$1,488$28,688
3438.590%5.340%$1,704$205$1,499$27,189
3448.590%5.340%$1,704$195$1,510$25,679
3458.590%5.340%$1,704$184$1,521$24,159
3468.590%5.340%$1,704$173$1,531$22,627
3478.590%5.340%$1,704$162$1,542$21,085
3488.590%5.340%$1,704$151$1,553$19,532
Year 29  $20,452$2,523$17,930 
3498.590%5.340%$1,704$140$1,565$17,967
3508.590%5.340%$1,704$129$1,576$16,391
3518.590%5.340%$1,704$117$1,587$14,804
3528.590%5.340%$1,704$106$1,598$13,206
3538.590%5.340%$1,704$95$1,610$11,596
3548.590%5.340%$1,704$83$1,621$9,975
3558.590%5.340%$1,704$71$1,633$8,342
3568.590%5.340%$1,704$60$1,645$6,697
3578.590%5.340%$1,704$48$1,656$5,041
3588.590%5.340%$1,704$36$1,668$3,372
3598.590%5.340%$1,704$24$1,680$1,692
3608.590%5.340%$1,704$12$1,692$0
Year 30  $20,452$921$19,532 
Grand
Total
    $612,807 $392,807 $220,000 

Mortgage Calculator - Help

Amortization Schedule
The amortization schedule show you how monthly principal and interest payment and principal balances change over the life of your loan.
Floor Rate
Floor rate is the minimum interest rate for an adjustable rate mortgage (ARM).
Index Rate
Rate Adjustment on ARMs are based on the index rate, the margin, the adjustment schedule, interest rate caps, and floor rate specified in your loan documents. Index rates change over time. They should be published and widely available. Common indexes used for setting mortgage rates have include the Prime Rate, Libor (London Interbank Offer Rate) and U.S. Treasury Rates.
Interest
The portion of your mortgage payment that is due to the interest rate being applied to the principal balance. The Total Interest for a mortgage is the sum of all interest paid over the life of a loan.
Interest Rate Adjustments
The interest rate changes on an adjustable rate mortage (ARM) during adjustment periods specified in your loan documents. Your interest rate may have a fixed period where it does not change followed by adjustements on a regularly scheduled basis. For example, the interest rate on a mortgage could be fixed for 2 years followed by adjustments every 6 months.
Interest Rate Caps
Limits how much your interest rate can be increased during each adjustment period for an ARM. The cap for the first adjustment period may be different than the cap on subsequent adjustments. There also may be a maximim overall cap on interest rate increases during the life of your loan.
Interest Rate Scenarios
To decide if an adjustable rate mortgage is right for you, you should how changes in interest rates will effect the mortgage. The adjustable rate mortgage calculator shows you how your payment changes in the best case where rates are set at the minimum for your mortgage, the worst case where rates are set at the maximum for your mortgage, and the stable case where rates remain constant for your mortgage.
Loan Amount
The initial principal balance or your mortgage at closing.
Margin
When an ARM adjusts the margin is added to the index rate to help determine your interest rate. Interest rate caps and the floor rate for your mortgage may limit how much your actual interest rate changes. The margin typically is fixed for the life of the loan. It should be clearly specified in your loan documents.
Payment Shock
Occurs when the required minimum payment for a mortgage increases significantly. This can occur on adjustable rate mortgage when interest rates rise sharply, on interest-only mortgages when the interest-only period ends, and on balloon mortgages when the balloon payment is due.
Principal
The portion of your mortgage payment that is used to pay down the current balance of your mortgage. The principal balance represents how much you owe on the mortgage.
Start Rate
The initial interest rate on an Adjustable Rate Mortgage.
Term
The amortization term is one of the key factors that determine your required mortgage payment. Your required mortgage payment for fully amortizing mortgages is the amount that would result in the mortgage being closest to being paid off by the end of the amortization term. Longer amortization terms result in lower required mortgage payments for fully amortizating mortgages, all other things being equal.