The comparison between the rates        

To calculate your monthly payment at 1.95%, you must multiply your loan amount by 3.7. (  100k times 3.7 =$370. principal and interest

A payment comparison of the 1.95% one month ARM plan (3.45% APR.) to a 6.875% fixed plan for a $275,000. loan amount on a 30 year note:

Monthly principal and interest payments for five years: .

adjusted for Bi-weekly
1.95% payment: 6.875%fixed payment: Monthly saving: Yearly Saving:

Year 1: $1,152. $1,807. $654. $7857.
Year 2: $1,238. $1,807. $568.. $6,823.
Year 3: $1,330. $1,807. $476. $5712.
Year 4: $1,419. $1,807. $377. $4527.

Year 5: $1,467. $1,807. $339. $4,075.

Total savings: $ 32,035.

If the total savings for 5 years were invested at 8% for 30 years, and you quit the loan after five years, the total accumulated in that account would be $255,698. which almost exceeds the original loan amount. This is extra cash flow that can be used for a substantial income that would not have existed otherwise.

The following balances of the above loan are based on current fully indexed rates (5.36%) 01/03 and the 1.95% ARM product on a Bi-weekly option. We also have a 2.45% plan with a full index rate of 4.83% and the payment is a bit lower.
Balance on the 1.95 % plan: year 5: $257,345. and balance yr.10: $234,504.
Balance on the 6.875% plan: year 5: $258,513. and balance yr.10: $235,286.

The above approximate ARM comparison is based on a COSI index which changes monthly and has an approximate 4.83% ten year history. Starter rates and fully indexed rates vary and this is not an offer to lend. Certain restrictions and conditions apply and your actual APR may vary.