IMPORTANT LOAN INFORMATION – PLEASE READ CAREFULLY

You should carefully read this disclosure; the promissory note, deed of trust or mortgage; any riders; and all other documents that you will be asked to sign if you accept an ARM loan.

ADJUSTABLE RATE MORTGAGE MEANS YOUR PAYMENT MAY CHANGE IN THE FUTURE. You are applying for an Adjustable Rate Mortgage (ARM) loan. This means that your interest rate and monthly payments may change during the life of your loan. Your monthly payments will increase if the interest rate rises and decrease if it falls. The date or dates on which changes can occur (referred to in this disclosure as “Change Date”) will be specified in the ARM loan documents. This ARM is based on the terms and conditions set forth in this disclosure and in the loan documents. We have based this disclosure on recent interest rates, index and margin values, discounts, and fees. Ask us for our current interest rate and margin.

An ARM is different from a fixed-rate mortgage 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.

HOW YOUR INTEREST RATE IS DETERMINED. Your interest rate will be determined by means of an index that may change from time to time.

The Index. The interest rate change on this ARM will be based on an interest rate index (referred to in this disclosure as the “Index.”) The Index is the weekly average yield on the 1 Year US Treasury Constant Maturity (UST1YW). Information about the index is available in the Federal Reserve Statistical Release H-15 (www.federalreserve.gov/releases/h15).

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, as discussed below.

Initial Interest Rate. Your initial interest rate (referred to as the “Start Rate”) on your loan will be disclosed to you prior to the time you obligate yourself to repay the loan. Your Start Rate may not be based on the Index used to make later adjustments.

Interest Rate Adjustments

• Your interest rate under this ARM can change yearly. See below for additional information pertaining to the ARM terms offered.
• Your interest rate cannot increase or decrease more than 2.000 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 6.000 percentage points above the Start Rate or lower than 3.000.

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.

Interest Rate Change Date for 7/1 ARM Program – Your interest rate will not change for the first 84 months (7 years) of the loan. The interest rate may change every year after the 7th year.

Interest Rate Change Date for 10/1 ARM Program – Your interest rate will not change for the first 120 months (10 years) of the loan. The interest rate may change every year after the 10th year.

HOW YOUR PAYMENTS ARE DETERMINED. During the first 12 months of the loan (“the Interest Only Period”), your monthly payment will consist of interest only. This means that during the Interest Only Period, your regular monthly payments will not reduce the principal balance of your loan. After the Interest Only Period ends, your regular monthly payment will consist of both principal and interest.

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 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.
• Payment Change for 7/1 ARM – Based on increases or decreases in the Index, payment amounts under this ARM loan can change after 84 month(s) and every 12 months thereafter.
• Payment Change for 10/1 ARM – Based on increases or decreases in the Index, payment amounts under this ARM loan can change after 120 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 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 6.000 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.

HOW YOUR PAYMENT CAN CHANGE (“Worst Case Scenario”). Your payment can change every 12 month(s) based on changes in the loan term, interest rate, or loan balance.

Example 5/1 ARM Program Primary Home
Loan Amount $10,000.00
Loan Term 30 Years
Initial Interest Rate 6.250%
Margin 3.000%
Index 5.230%
Rounding 0.125%
Floor Cap 3.000%
Change Cap 2.000%
Life Cap 6.000%

The maximum amount that the interest rate can rise under this ARM program is 6.000 percentage points above the initial interest rate and the payment can rise from a first-year payment of $52.08 to a maximum of $100.31 in the 8th 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 $52.08 = $312.48

Example 7/1 ARM Program Primary Home
Loan Amount $10,000.00
Loan Term 30 Years
Initial Interest Rate 6.375%
Margin 3.000%
Index 5.230%
Rounding 0.125%
Rounding 0.125%
Floor Cap 3.000%
Change Cap 2.000%
Life Cap 6.000%

The maximum amount that the interest rate can rise under this ARM program is 6.000 percentage points above the initial interest rate and the payment can rise from a first-year payment of $53.12 to a maximum of $99.04 in the 10th 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 $53.12 = $318.72

Example 10/1 ARM Program Primary Home
Loan Amount $10,000.00
Loan Term 30 Years
Initial Interest Rate 6.625%
Margin 3.000%
Index 5.230%
Rounding 0.125%
Rounding 0.125%
Floor Cap 3.000%
Change Cap 2.000%
Life Cap 6.000%

The maximum amount that the interest rate can rise under this ARM program is 6.000 percentage points above the initial interest rate and the payment can rise from a first-year payment of $55.21 to a maximum of $97.53 in the 13th 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 $55.21 = $331.26

The above examples of payments based on $10,000 loan amount fixed for 30 years at an initial margin and index in effect June 2023. Your margin and index may be different, as changes in the rate may increase or decrease substantially. The current margin value and index will be provided to you within three business days from date we receive your application.

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.

DISCLOSURES FOR OTHER ARM PROGRAMS are available on request.