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Subject:  Re: Amortization: 30YR vs ARM Date:  2/7/2014  12:41 AM
Author:  CCinOC Number:  126797 of 128883

Actually, it doesn't... it doesn't matter whether the rate is fixed or adjustable, if the amortization period (the 'running track,' if you will) is the same, then the earlier amortization goes to whichever has the lower interest rate ('longer stride,' if you will… because the same amortized payment has more principal 'covering ground' on lower interest rates than higher interest rates.) ~Dave

I have no idea what he just said--<grin>--but, crackdclaw, the amortization is the same during the fixed rate period of the ARM as the first five years of the 30 year FRM provided that the interest rates are the same.

But they wouldn't be the same, would they, because an ARM rate is lower than a 30 year FRM rate, which is why one selects an ARM to begin with.

Now if you're paying the ARM as if it were a 30 year FRM, then the ARM amortizes faster because more of the payment is going toward principal paydown.
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