Adjustable Rate Mortgage Loan Disclosure

Adjustable Rate Mortgages (ARM)

IMPORTANT LOAN INFORMATION – PLEASE READ CAREFULLY

Adjustable Rate Mortgages (ARM): a mortgage loan in which your payment and interest rate may change in the future.

This means that both your interest rate and monthly payments may fluctuate throughout the duration of your loan. If the interest rate increases, your monthly payments will rise; conversely, they will decrease if the rate falls. The date or dates on which changes can occur (“Change Date”) will be specified in the Adjustable Rate Mortgage (ARM) loan documents. We have formulated this disclosure based on current interest rates, index and margin values, discounts, and fees. Please feel free to inquire about our latest interest rate and margin.

A Fixed-Rate Mortgage is different than an ARM loan. For a fixed-rate loan, the monthly payments of principal and interest do not change during the life of the loan. You should consider carefully which type of loan is best for you.

INTEREST RATE DETERMINATION

Your interest rate will be determined by means of an index – which fluctuates – and that may change after loan consummation.

The Index

The interest rate change on this ARM will be based on an interest rate index (“The Index”). The Index is the weekly average yield on the 1 Year US Treasury Constant Maturity: Federal Reserve Statistical Release H-15

Interest Rate

Your interest rate is based on the Index value plus a margin, rounded to the nearest 0.125 percent. A change in the Index generally will result in a change in the interest rate. The amount that your interest rate may change also may be affected by the periodic interest rate change limitations and the lifetime interest rate limits, outlined below:

Initial Interest Rate Discount

Your initial interest rate will be discounted and will not be based on the Index used to make later adjustments. You should note, however, that because your initial interest rate will be discounted, your interest rate may increase on the first Change Date even if the Index remains the same or decreases. Ask our Mortgage Department for the amount our adjustable-rate mortgages are currently discounted.

Interest Rate Adjustments

Your interest rate under this ARM can change yearly after the initial rate change. See below for additional information pertaining to the ARM terms offered.
Your interest rate cannot increase or decrease more than 5.000 percentage points at first adjustment and 2.000 percentage points per subsequent adjustment from the initial interest rate excluding any buydown.
Your interest rate will never be greater than 5.000 percentage points above the Initial Discount Rate or lower than 2.750%.

Interest Rate Change Date for 3/1 ARM Program – Your interest rate will not change for the first 36 months (3 years) of the loan. The interest rate may change every year after the 3rd year.

Interest Rate Change Date for 5/1 ARM Program – Your interest rate will not change for the first 60 months (5 years) of the loan. The interest rate may change every year after the 5th year.

PAYMENT DETERMINATION

Your initial monthly payment of principal and interest will be determined based on the interest rate, loan term, and balance when your loan is closed. Your payment will be set to amortize the loan over a period of 360 payments.

Frequency of Payment Changes

Based on increases or decreases in the Index, payment amounts under this ARM loan can change at the first change date and every 12 months thereafter. See below for details pertaining to each ARM Program offered. However, your monthly payment amount could change more frequently if there is a change in the taxes, assessments, insurance premiums, or other charges required to be made into an escrow or impound account.

Payment Change for 3/1 ARM – Based on increases or decreases in the Index, payment amounts under this ARM loan can change after 36 month(s) and every 12 months thereafter.

Payment Change for 5/1 ARM – Based on increases or decreases in the Index, payment amounts under this ARM loan can change after 60 month(s) and every 12 months thereafter.

Limitations on Interest Rate Payment Changes

Your interest rate will not increase or decrease on the first change date by more than 2.000 percentage points (3/1 ARM) or 5.000 percentage points (5/1 ARM) from the initial interest rate excluding any buydown. After the initial adjustment period, your interest rate will not increase or decrease by more than 2.000 percentage points per year. Your interest rate cannot increase more than 5.000 percentage points above the initial interest rate (excluding any buydown) over the life of the loan.

Adjustment Notices

You will be notified at least 210, but no more than 240, days before the first payment at the adjusted level is due after the initial interest rate adjustment of the loan. This notice will contain information about the adjustment, including the interest rate, payment amount, and loan balance. You will also be notified at least 60, but no more than 120, days before the first payment at the adjusted level is due after any interest rate adjustments resulting in a corresponding payment change. This notice will contain information about the adjustment, including the interest rate payment amount, and loan balance.

PAYMENT CHANGES

Your monthly payment can increase or decrease substantially based on changes in the interest rate.

Example 3/1 ARM Program Primary Home

Loan Amount $10,000.00
Loan Term 30 Years
Initial Interest Rate 6.50%
Margin 2.750%
Index 7.50%
Rounding 0.125%
Change Cap 2.000%
Life Cap 5.000%
Maximum Interest Rate 11.50%
Minimum Interest Rate 2.75%

Your monthly payment can change after 36 month(s) and every 12 months thereafter based on changes in the loan term, interest rate, or loan balance. For example, on a $10,000 loan with a 360 month term and an initial discounted rate of 6.500%, in effect as of February 2025, based on a margin of 2.750% and index of 7.500% rounded to the nearest 0.125%, the maximum amount that the interest rate can rise under this ARM program is 5.000 percentage points above the initial interest rate to 11.500%, and the payment can rise from a first-year payment of $63.21 to a maximum of $99.02 in the 6th year.

To see what your payment would be, divide your mortgage amount by $10,000, then multiply the monthly payment by that amount. For example, the monthly payment for a new loan amount of $60,000 would be $60,000 divided by $10,000 = 6. Multiply the payment amount by this number, e.g., 6 x $63.21 = $379.26 per month.

Example 5/1 ARM Program Primary Home

Loan Amount $10,000.00
Loan Term 30 Years
Initial Interest Rate 6.50%
Margin 2.750%
Index 7.500%
Rounding 0.125%
Change Cap 2.000%
Life Cap 5.000%
Maximum Interest Rate 11.50%
Minimum Interest Rate 2.75%

Your monthly payment can change after 60 month(s) and every 12 months thereafter based on changes in the loan term, interest rate, or loan balance. For example, on a $10,000 loan with a 360 month term and an initial discounted rate of 6.50%, in effect as of February 2025, based on a margin of 2.75% and index of 7.500% rounded to the nearest 0.125%, the maximum amount that the interest rate can rise under this ARM program is 5.000 percentage points above the initial interest rate to 6.50%, and the payment can rise from a first-year payment of $63.21 to a maximum of $99.03 in the 8th year.

PREPAYMENT

You may pay this ARM loan in whole or part without penalty at any time. If you are paying more than your regularly scheduled payment, you must notify us as to how you want the funds applied.

DEMAND FEATURE

This loan does not include a demand feature.