The LOAN Procedure

Getting Started: LOAN Procedure

PROC LOAN supports four types of loans. You specify each type of loan with the corresponding statement: FIXED, BALLOON, ARM, and BUYDOWN.

  • FIXED—Fixed rate loans have a constant interest rate and periodic payment throughout the life of the loan.

  • BALLOON—Balloon payment loans are fixed rate loans with lump sum payments in certain payment periods in addition to the constant periodic payment.

  • ARM—Adjustable rate loans are those in which the interest rate and periodic payment vary over the life of the loan. The future interest rates of an adjustable rate loan are not known with certainty, but they will vary within specified limits according to terms stated in the loan agreement. In practice, the rate adjustment terms vary. PROC LOAN offers a flexible set of options to capture a wide variety of rate adjustment terms.

  • BUYDOWN—Buydown rate loans are similar to adjustable rate loans, but the interest rate adjustments are predetermined at the initialization of the loan, usually by paying interest points at the time of loan initialization.