EARLY ARM DISCLOSURE STATEMENT
CoastHills Federal Credit Union
P. O. Box 8000, Santa Maria, CA 93456
IMPORTANT LOAN INFORMATION - PLEASE READ INFORMATION BELOW 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 for a 5-5 ARM is UST5YW and for
the 15-15 ARM is UST10YW. 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 DISCOUNT. Your initial interest rate will be discounted and will not be based on the Index sed to make later adjustments. You should note, however, that because your initial interest
rate will be discounted, your interest rate may increase on the first Change Date even if the Index remains the same or decreases. Ask us for the amount of the current interest rate discount.
- INTEREST RATE ADJUSTMENTS.
- Your interest rate under the 5-5 ARM can change after 60 months and every 60 months thereafter. 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 5.000 percentage
points above the initial interest rate or lower than your initial interest rate.
- Your interest rate under the 15-15 ARM can change once after 180 months. Your interest rate cannot increase or decrease more than 5.000 percentage points at that adjustment
with no further subsequent adjustments from the initial interest rate excluding any buydown. Your interest rate will never be greater than 5.000 percentage points above the initial interest
rate or lower than your initial interest rate.
- HOW YOUR PAYMENTS ARE DETERMINED. Your initial monthly payment of principal and interest will be determined based on the interest rate, loan term, and balance when your loan is closed. Your payment
will be set to amortize the loan over a period of 360 payments.
- FREQUENCY OF PAYMENT CHANGES.
- Based on increases or decreases in the Index, payment amounts under the 5-5 ARM loan can change after 60 months and every 60 months thereafter. However your monthly
payment 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.
- Based on increases or decreases in the Index, payment amounts under this 15-15 ARM loan can change after 180 months with no further subsequent adjustments. However your monthly payment 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.
- LIMITATIONS ON INTEREST RATE PAYMENT CHANGES.
- For the 5-5 ARM loan, 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 5.000 percentage
points above the initial interest rate (excluding any buydown) over the life of the loan.
- For the 15-15 ARM loan, your interest rate will not increase or decrease on the first change date by more than 5.000 percentage points from the initial interest rate excluding any buydown, with no
further subsequent adjustments. Your interest rate cannot increase more than 5.000 percentage points above the initial interest rate (excluding any buydown) over the life of the loan.
- ADJUSTMENT NOTICES.
- For the 5-5 ARM loan, changes to the interest rate may occur every 5 years. The Note Holder will deliver or mail to you a notice of any changes in the loan's interest rate and the amount of the monthly payment
before the effective date of any change. The first notice will be delivered at least 210 days but no more than 240 days before the first adjustment payment is due. A second notice will be delivered at least 60
days, but no more than 120 days, before the first adjusted payment is due. Thereafter, subsequent changes will be delivered or mailed to you at least 60 days but no more than 120 days before the following adjusted
payments are due.
- For the 15-15 ARM loan, a single change in interest rate will occur on the 15th year. The Note Holder will deliver or mail to you a notice of change in the loan's interest rate and the amount of the monthly payment before
the effective date of the change. The notice will be delivered at least 210 days but no more than 240 days before the adjustment period. You will receive a second notice delivered at least 60 days, but no more
than 120 days, before the first adjusted payment is due.
- For Home Equity Line of Credit (HELOC) loans, the change in the interest rate may occur on a monthly basis. Disclosure of the rate change and payment change will be provided on your monthly credit union statement under
the HELOC subsection each month. Notice of these terms will be provided during the consummation process.
HOW YOUR PAYMENT CAN CHANGE ("Worst Case Scenario").
- For the 5-5 ARM loan, your payment can change every 60 months based on changes in the loan term, interest rate, or loan balance. For example, on a $10,000 loan with a 360 month term and
an initial rate of 5.875 (based on a margin of 2.25 and index of 4.120 rounded to the nearest 0.125%), the maximum amount that the interest
rate can rise under this ARM program is 5.000 percentage points above the initial interest rate and the payment can rise from a first-year payment of $59.15 to the maximum
of $86.65 in the 16th year.
- For the 15-15 ARM loan, your payment can change every 180 months based on changes in the loan term, interest rate, or loan balance. For example, on a $10,000 loan with a 360 month term and
an initial rate of 6.625 (based on a margin of 1.500 and index of 4.130 rounded to the nearest 0.125%), the maximum amount
that the interest rate can rise under this ARM program is 5.000 percentage points above the initial interest rate and the payment can rise from a first-year payment of $64.03 to
a maximum of $85.78 in the 16th 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. 6x$64.03 = $384.18.
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. Available on Request.
BORROWER ACKNOWLEDGEMENT. After having read the contents of the above disclosure. I/we acknowledge receipt of this disclosure and further acknowledge that this disclosure was completed in full prior to
its receipt. I/we also acknowledge receipt of the handbook entitled "Consumer Handbook on Adjustable Rate Mortgages."