This disclosure describes the
features of the adjustable-rate mortgage (ARM) program you are considering.
Information on other ARM programs is available upon request.
How Your Interest Rate and Payment Are Determined
- Your interest rate will be based on an index rate
plus a margin.
- Your payment will be based on the interest rate,
loan balance, and loan term.
- The interest rate will be based on the weekly average
yield on United States Treasury securities adjusted to a constant
maturity of 1 year (your index), plus our margin. Ask us for our current
interest rate and margin.
- Information about the index rate is published weekly
in the Wall Street Journal.
- Your interest rate will equal the index rate plus
our margin unless your interest rate “caps” limit the amount of change
in the interest rate.
How Your Interest Rate Can
Change
- Your interest rate can change yearly.
- Your interest rate cannot increase or decrease more
than 2 percentage points per year.
- Your interest rate cannot increase or decrease more
than 5 percentage points over the term of the loan.
How Your Monthly Payment
Can Change
- Your monthly payment can increase or decrease substantially
based on annual changes in the interest rate.
- [For example, on a $10,000, 30-year loan with an
initial interest rate of 12.41 percent in effect in July 1996, the
maximum amount that the interest rate can rise under this program
is 5 percentage points, to 17.41 percent, and the monthly payment
can rise from a first-year payment of $106.03 to a maximum of $145.34
in the fourth year. To see what your payment is, divide your mortgage
amount by $10,000; then multiply the monthly payment by that amount.
(For example, the monthly payment for a mortgage amount of $60,000
would be $60,000 ÷ $10,000 = 6; 6 × 106.03 = $636.18 per month.)
- [You will be notified at least 210, but no more than
240, days before 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 be notified at least 60, but no more than
120, days before first payment at the adjusted level is due after
any interest rate adjustment resulting in a corresponding payment
change. This notice will contain information about the adjustment,
including the interest rate, payment amount, and loan balance.]
[Example The example below shows how your payments would have
changed under this ARM program based on actual changes in the index
from 1982 to 1996. This does not necessarily indicate how your index
will change in the future. The example is based on the following assumptions.
Example
| Amount
|
$10,000 |
Caps
|
2 percentage points annual |
| Term
|
30 years |
|
interest rate |
| Payment adjustment
|
1 year |
|
5 percentage points lifetime |
| Interest adjustment
|
1 year |
|
interest rate |
| Margin
|
3 percentage points |
Index
|
Weekly average yield
on U.S.
Treasury securities adjusted to
a
constant maturity of one year |
Payments would
have changed under this ARM program based on actual changes in the
index from 1982 to 1996
| Year |
Index |
Margin* |
Interest Rate |
Monthly Payment |
Remaining Balance |
| (as of 1st
week ending in July) |
(%) |
(percentage points) |
(%) |
($) |
($) |
| 1982 |
14.41 |
3 |
17.41 |
145.90 |
9,989.37 |
| 1983 |
9.78 |
3 |
15.41** |
129.81 |
9,969.66 |
| 1984 |
12.17 |
3 |
15.17 |
127.91 |
9,945.51 |
| 1985 |
7.66 |
3 |
13.17** |
112.43 |
9,903.70 |
| 1986 |
6.36 |
3 |
12.41*** |
106.73 |
9,848.94 |
| 1987 |
6.71 |
3 |
12.41*** |
106.73 |
9,786.98 |
| 1988 |
7.52 |
3 |
12.41*** |
106.73 |
9,716.88 |
| 1989 |
7.97 |
3 |
12.41*** |
106.73 |
9,637.56 |
| 1990 |
8.06 |
3 |
12.41*** |
106.73 |
9,547.83 |
| 1991 |
6.40 |
3 |
12.41*** |
106.73 |
9,446.29 |
| 1992 |
3.96 |
3 |
12.41*** |
106.73 |
9,331.56 |
| 1993 |
3.42 |
3 |
12.41*** |
106.73 |
9,201.61 |
| 1994 |
5.47 |
3 |
12.41*** |
106.73 |
9,054.72 |
| 1995 |
5.53 |
3 |
12.41*** |
106.73 |
8,888.52 |
| 1996 |
5.82 |
3 |
12.41*** |
106.73 |
8,700.37 |
* This is a margin we
have used recently; your margin may be different.
** This interest rate reflects a 2 percentage
point annual interest-rate cap.
*** This interest rate reflects a 5 percentage point
lifetime interest-rate cap. |
| Note: To see what your payments would have
been during that period, divide your mortgage amount by $10,000; then
multiply the monthly payment by that amount. (For example, in 1996
the monthly payment for a mortgage amount of $60,000 taken out in
1982 would be: $60,000 ÷ $10,000 = 6; 6 × $106.73 = $640.38.) |
- [You will be notified at least 210, but no more than
240, days before 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 be notified at least 60, but no more than
120, days before first payment at the adjusted level is due after
any interest rate adjustment resulting in a corresponding payment
change. This notice will contain information about the adjustment,
including the interest rate, payment amount, and loan balance.]
