Non Traditional Negative Amortizatoin And Interest

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Non Traditional Negative Amortizatoin And Interest

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Non Traditional Negative Amortizatoin And Interest

  1. 1. More Mortgage Info 351 E. Foothill Blvd, Suite 200, Arcadia, CA 91006 ~ (626) 739-1190 Fax (626) 739-1198 Non Traditional Negative Amortization and Interest Only Mortgage Disclosure I (we) understand that the loan that is being applied for does contain one or more of the following repayment features (all checked boxes) Interest Only Option An initial interest only repayment period during the first ____ months of the loan at which time the rate maybe  fixed or may  fluctuate (an adjustable rate mortgage with an initial fixed period of ____ months). The payment that is required to be made during this period, will only pay the interest owed and will not reduce the principle balance of the loan. After the interest only period ends the payment will increase to allow for both interest and principle to be repaid over the remaining term of the loan. Payment Option Adjustable Rate Mortgage Option  A Payment Option ARM (adjustable rate mortgage) period of ____ months, is a period during which the interest rate is fixed and which there are a number of different payment options, one or more of which may include a negative amortization period. A negative amortization period is a time during which, the minimum payment required to be made will be less then what is necessary to reduce any of the principle balance of the loan or to pay all interest that has accrued. At the end of the negative amortization period occurring when the option period ends, the payment will adjust and the interest rate may adjust as well. At this time, the payment will increase substantially to allow for the repayment of all interest that is accruing against the current balance (now up to 115% of the original loans balance) over the remaining term of the interest only option. (See above loan.) At the end of the interest only period, the payment will again increase to pay both interest and principle over the remaining term of the loan.  Recast Feature: If at any time the principle balance reaches 115% of the original loan balance, the loan will recast. At that time the loan will adjust and the payment will increase substantially to pay both the interest and principle over the remaining term of the loan. Prepayment Penalty Provision Both apply if both boxes are checked. The more restrictive penalty applies as long as it is in effect  A prepayment provision, with penalty period no longer than ______ months, that I(we) shall be required to pay a penalty charge, should I(we) pay in advance an amount greater then 20% of the original scheduled balance, refinance the loan or sell the property during the term of the penalty period. The details of which can be found on the promissory not and or prepayment note addendum with your loan documents.  A prepayment provision, with a penalty period no longer than ______ months, that I (we) shall be required to pay a penalty charge, should I (we) pay in advance an amount greater then 20% of the original scheduled, refinance the loan or sell the property during the term of the penalty period, unless there is a bona fide sale of the property to an unrelated third party. The details of which can be found on the promissory note and or prepayment note addendum with your loan documents. 2nd Mortgage Option  A simultaneous second mortgage in lieu of a higher down payment. I (we) understand that we will have 2 separate payments each month, one for the 1st Mortgage and another for the 2nd Mortgage. I (we) have been provided a copy of the guide: Interest-Only Mortgage Payments and Payment-Option ARMs-Are They for You? Initials_______ I (we) have reviewed the guide with my (our) mortgage originator during the loan application process and have been made aware of an understand the potential risks associated with the loan repayment features that have been chosen and believe that they are the best options and are well within my (our) capacity to repay, both now and when the payment adjusts. I (we) have been made aware that other loan programs are available that do not contain these features. _________________________________________ ________________________________________ Borrower Date Borrower Date _________________________________________ Mortgage Originator Date

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