Information About You and Your House

 Loan is for Purpose of:

  Refinance

 How Long Do You Expect to Stay in Your House

  7.0 years

 Income Tax Bracket

  33.0%

 Pre-tax Rate of Interest on Savings

  3.00%

 After-tax Rate of Interest on Savings

  2.01%

 Current Value of House

  $500,000

 Expected Rate of Property Value Appreciation

  4.00%

Loan Information

Existing ARM

New FRM

 Loan Amount

$310,000

$310,000

 Additional Loan Amount if Points, Costs & Prepayment Penalty are Financed

$1,580

 Total Loan Amount

$310,000

$311,580

 Interest Rate

4.50%

6.00%

 Loan Term

312 months

30 years

 Starting Payment on ARM - Monthly Mortgage Payment on FRM

$1,687.35

$1,868.08

 Points

0.00%

0.00%

 Points Deductible for Tax Purposes

$0

$0

 All Other Closing Costs

0.00%

$1,580

Rate Adjustments & Minimum/Maximum Rates

Existing ARM

 Rate Index Base Value

5.49%

 Margin

2.75%

 Number of Months to 1st Adjustment

12 months

 Maximum Rate Change on 1st Adjustment

5.00%

 Duration Between Subsequent Rate Adjustments

12 months

 Subsequent Rate Adjustments

2.00%

 Maximum Interest Rate over Life of Mortgage

9.50%

 Minimum Interest Rate over Life of Mortgage

2.75%

Assumptions About Future Interest Rates

Existing ARM

 Stable: the interest rate index does not change from its initial value

 Worst Case: the interest rate index jumps to 100% in month 2

Costs Over 7 — Year Period

Existing ARM
Stable

Existing ARM
Worst Case

New FRM

 Upfront Costs Paid in Cash

      Points

Financed

      Other Closing Costs

Financed

      Prepayment Penalty on ARM

Financed

 Monthly Costs

      Principal and Interest

$189,843

$211,213

$156,919

 Lost Interest

      On Upfront Costs

      On Monthly Costs

$12,812

$14,617

$11,425

 Total Costs

$202,655

$225,830

$168,343

Costs Offsets

Existing ARM
Stable

Existing ARM
Worst Case

New FRM

 Tax Savings

      On Points

$0

$0

$0

      On Interest

$56,746

$63,731

$44,181

 Reduction in Loan Balance

$29,053

$30,472

$30,702

 Total Cost Offsets

$85,799

$94,203

$74,882

 Cost Net of Offsets

$116,857

$131,627

$93,461

Conclusions - Based on a 7 Year Holding Period

 Over the next 7 years the new FRM will save you (cost you):

$23,396

$38,166

Caveat: The after tax analysis is accurate only to the extent that all of your interest deductions are allowable on your tax return. If all interest deductions are not allowable, the actual after tax results for you will fall somewhere between the before tax analysis and the after tax analysis. Deductibility of mortgage interest depend on the size of the loan, your Adjusted Gross Income, and other factors. See your tax professional for detailed advice.

Note: Points may be deductible for tax purposes even though they are financed. The amount of deductible points cannot exceed the amount of cash supplied by the borrower.

Note: Mortgage insurance premiums remain the same for 10 years, at which point they are recalculated using a premium rate of .2, unless the initial rate is less than .2 in which case the premium stays unchanged. If the user enters an appreciation rate, the premium is eliminated entirely when the loan balance reaches 80% of the appreciated value; otherwise, the premium terminates when the balance reaches 78% of the original property value.