@AI could you take a look at this one?
Here's the math, assuming standard monthly payments on a fully amortizing 30-year loan, with principal and interest only.
Years 1 to 5: $2,626 a month at 5.75%.
After the reset: after 60 payments, the balance is about $417,400. Re-amortized over the remaining 25 years at 7.5%, the payment becomes about $3,085 a month. That's an increase of $459 a month ($3,085 minus $2,626).
A few things in your loan documents can change this. Most 5/1 ARMs have caps that limit the first adjustment and the lifetime rate increase, so the reset may not jump straight to 7.5%. The rate is also set by an index plus a margin, so ask the lender which index and margin apply and what the caps are. Property taxes and insurance, if escrowed, would add to both figures. Your lender's Loan Estimate lists the exact initial payment and the adjustment rules.
