| Questions |
Example |
Name of lender or broker & contact information
|
ABC Mortgage Co.
800-123-4567 |
| Mortgage amount |
$180,000 |
| Loan description |
Payment-option ARM; 1-month introductory rate; 30-year term |
| Is this an I-O payment or a paymentoption ARM? |
Payment-option ARM |
| If different payment options are available, what are the options? |
1. First year’s minimum payment based on initial interest rate
2. Interest-only payment based on rate after adjustment
3. Fully amortizing payment based on 30-year term |
| What is the full term of the mortgage? |
30 years |
| How long is the option period? |
The loan will be recalculated (recast) every 5 years. Payment options are available every month except
(1) when
loan is recast every 5 years,
(2) when balance is 125% of original loan, or
(3) if you fall more than 60 days behind in your payments. |
| What is the initial interest rate? |
1.6% |
| For a payment-option ARM, how long does the initial interest rate apply? |
1 month |
| What will the interest rate be after the initial rate? |
6.4% |
| How often can the interest rate adjust? |
Monthly |
| What is the periodic interest rate cap? |
2% per year |
| What is the overall interest rate cap? |
6% lifetime cap
(maximum interest rate is 12.4%) |
| How often will the monthly payments adjust? |
Annually |
| What is the payment cap? |
7.5% per year; does not apply to recalculation every 5th year |
| Can this loan have negative amortization? |
Yes |
| Is there a limit to how much the balance
can grow before the loan will be
recalculated? |
Up to 125% of original amount borrowed
(loan will be recalculated if balance grows to $225,000) |
| Is there a prepayment penalty if I end this mortgage early by refinancing or selling my home? |
Yes |
| How much is the penalty? |
3% of amount borrowed in 1st year ($5,400), down to 1% of amount borrowed in 3rd year ($1,800); no prepayment penalty after year 3 |
| What will my monthly payments be for the first year of the loan? |
$630 |
Does this include taxes and insurance?
Homeowner’s association fees? |
No |
| What is the most my minimum monthly payment could be after 12 months? |
$677 (based on 7.5% cap) |
| What is the most my minimum monthly payment could be after 24 months? |
$728 (based on 7.5% cap) |
| What is the most my minimum monthly payment could be after 36 months? |
$783 (based on 7.5% cap) |
| What is the most my minimum monthly payment could be after 48 months? |
$2,491
(based on recalculation of the loan when balance is $225,000) |
| What is the most my minimum monthly payment could be after 60 months (5 years)? |
$2,491
(based on recalculation of the loan after 4 years) |
| What would my minimum monthly payment be after 60 months (5 years) if the interest rate stays the same? |
$1,308
(based on recalculation of the loan after 5 years) |
| What are the fees and charges due at closing on this loan? |
See good faith estimate |