Sample Document. Intended as reference only
Your actual closing documents will vary according to the lending institution
Page
4.
INTEREST RATE AND MONTHLY PAYMENT CHANGES
(A)
Change Dates
The
interest rate I will pay may change on the 1st day of JULY 1, 2004
and on that day every 12th month thereafter. Each date on which my interest rate
could change is called a "Change Date. "
(B)
The Index
Beginning with the first Change
Date, my interest rate will be based on an Index. The "Index" is the
weekly average yield on United States Treasury securities adjusted to a constant
maturity of one year , as made available by the Federal Reserve Board. The most
recent Index figure available as of the date 45 days before each Change Date is
called the "Current Index."
If
the Index is no longer available, the Note Holder will choose a new index, which
is based upon comparable information. The Note Holder will give me notice of
this choice.
(C)
Calculation of Changes
Before
each Change Date, the Note Holder will calculate my new interest rate by adding
THREE AND 375/1000 percentage points (3.375% ) to the Current Index. The Note
Holder will then round the result of this addition to the nearest one-eighth of
one percentage point (0.125%). Subject to the limits stated in Section 4(D)
below, this rounded amount will be my new interest rate until the next Change
Date.
The
Note Holder will then determine the amount of the monthly payment that would be
sufficient to repay the unpaid principal that I am expected to owe at the Change
Date in full on the Maturity Date at my new interest rate in substantially equal
payments. The result of this calculation will be the new amount of my monthly
payment.
(D)
Limits on Interest Rate Changes
The
interest rate I am required to pay at the first Change Date will not be greater
than 9.250 % or less than
7.250
%. Thereafter, my interest rate will never be increased or decreased on any
single Change Date by more than TWO AND 000/1000 percentage points (2.000 % )
from the rate of interest I have been paying for the preceding 12 months. My
interest rate will never be greater than 13.250%.
(E)
Effective Date of Changes
My
new interest rate will become effective on each Change Date. I will pay the
amount of my new monthly payment beginning on the first monthly payment date
after the Change Date until the amount of my monthly payment changes again.
(F)
Notice of Changes
The Note Holder will deliver or mail
to me a notice of any changes in my interest rate and the amount of my monthly
payment before the effective date of any change. The notice will include
information required by law, to be given to me, also the title and telephone
number of a person who will answer any question I may have regarding the notice.
5.
BORROWER'S RIGHT TO PREPAY
**
See attached
Prepayment Rider.
I have the right to make payments of
Principal at any time before they are due. A payment of Principal only is known
as a "Prepayment. " When I make a Prepayment, I will tell the Note
Holder in writing that I am doing so. I may not designate a payment as a
Prepayment if I have not made all the monthly payments due under the Note.
I
may make a full Prepayment or partial Prepayments without paying a Prepayment
charge. The Note Holder will use my Prepayments to reduce the amount of
Principal that I owe under this Note. However, the Note Holder may apply my
Prepayment to the accrued and unpaid interest on the Prepayment amount, before
applying my Prepayment to reduce the Principal amount of the Note. If I make a
partial Prepayment, there will be no changes in the due dates of my monthly
payment unless the Note Holder agrees in writing to those changes. My partial
Prepayment may reduce the amount of my monthly payments after the first Change
Date following my partial Prepayment.
However, any reduction due to my partial Prepayment may be offset by an interest
rate increase.
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MULTISTATE ADJUSTABE RATE NOTE--ARM 5-2Single Family-- Fannie Mae/Freddie Mac MODIFIED INSTRUMENT
FANNIE MAE ARM 4-2/5-2/6-2 Form 3502 1/01
Document Systems, Inc. (800) 649-1362 Page 2 of 4
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