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Adjustable Rate Mortgage Program Disclosure
3/1 ADJUSTABLE RATE PROGRAM (ROUNDED TO THE NEAREST 1/8)
Program Code: 004
This disclosure describes the features of the adjustable rate mortgage (ARM) program you are considering. Disclosures and further information on other ARM programs are available upon request
Under the ARM program, there is no option to convert your ARM to a fixed rate loan.
How Your Interest Rate And Payment Can Change
Your interest rate and payment amount can change. Index values are published by the Federal Reserve Board in it's weekly press release number H.15 and in it's monthly press release G.13, which may be obtained by writing to the Board of Governors of the Federal Reserve System, Publication Services, Washington, D.C. 20551. You may also check the index by accessing their website at www.federalreserve.gov/releases/h15/update.
If the index becomes unavailable, GCF will choose a new index which will be based on comparable information. You will be notified of the new index. Starting with your first change, your interest rate will be based on the index rate plus a margin, and will be rounded up. Your payment will be based on the interest rate, loan balance and remaining term.
Many of the terms used here, such as "Index" and "Margin" are explained in the booklet entitled "Consumer Handbook on Adjustable Rate Mortgages", which we have provided to you.
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), published weekly (usually Tuesday) in the Wall Street Journal plus our margin. Please ask us for our current interest rate and margin.
Each time we change your interest rate, it will be set to equal the index plus our margin, and rounded to the nearest 1/8 of one percentage point. This will equal your new interest rate unless your interest rate "caps" limit the amount of change in the interest rate. See the description of the "caps" in the section below.
Your initial interest rate may not be based on the index used to make later adjustments. Your initial rate may be a discounted or premium rate. Please ask us for the amount of our current interest rate discounts or premiums.
How Your Interest Rate Can Change
Your interest rate at the first change (3 years) cannot increase or decrease more than two percentage points (2%). Each adjustment thereafter cannot increase or decrease more than two percentage points (2%). The date on which the new rate is effective is called the "Change Date." The most recent index available 45 days prior to the Change Date will be used to determine your new interest rate. During the term of the loan the rate cannot increase more than five percentage points (5%) over the initial interest rate. During the term of the loan the Interest Rate cannot decrease lower than Three Percent (3%). These are called rate "caps." All rates will be rounded to the nearest 1/8%. If your initial rate is discounted, your interest rate on the first Change Date may increase even if the index remains the same.
How Your Monthly Payment Can Change
Your interest rate and payment can change once each year after the initial rate and payment change. (The amounts and changes in any tax escrows or insurance escrows are not described or taken into account in this advance disclosure).
For example, on a $10,000 30-year loan with an initial interest rate of 6.875% in effect in DECEMBER, 2005, the maximum amount that the interest rate can rise under this loan program is 5.000 percentage points to 11.875%, and the monthly payment can rise from a first-year payment of $65.69 to a maximum of $99.23 in the sixth year. These payments are principal and interest only and do not include tax escrow or insurance payments.
You will be notified in writing at least 25 but no more than 120 days before the due date of a payment at a new level due to an interest rate adjustment. If an interest rate adjustment occurs and does not affect your payment amount, you will be notified once each year of any such interest rate adjustment made to your loan. These notices will contain information, as applicable, about:
- The current and prior interest rates.
- The index values upon which the current and prior interest rates are based.
- The extent to which we have foregone any increase in the interest rate if any.
- The contractual effects of the adjustment, including the payment due after the adjustment is made, and a statement of the loan balance.
- The payment, if different from the payment referred to in paragraph 4 of this section that would be required to fully amortize your loan at the new interest rate over the remainder of your term.
If Lender exercises this option, Lender shall give Borrower notice of acceleration. The notice shall provide a period of not less than 30 days from the date the notice is delivered or mailed within which Borrower must pay all sums. If Borrower fails to pay these sums prior to the expiration of this period, Lender may invoke any remedies permitted by the Security Instrument without further notice or demand on Borrower.
Acknowledgments
By clicking on the green continue below:
I/We hereby acknowledge receipt of this disclosure as well as other ARM program disclosures for which I/We have expressed an interest prior to application.
I/We hereby acknowledge receipt of the Consumer Handbook on Adjustable Rate Mortgages.
I/We acknowledge that I/We must qualify for the proposed loan, or my/our loan will not be approved to close.
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