7/1 ARM

DESCRIPTION: The monthly interest rate for this 7/1 ARM is fixed for an initial term of 7 years. Each year after that term, the rate will be adjusted and calculated on the basis of the average yield on U.S. Treasury securities adjusted to a constant maturity of one year, plus an additional fixed margin of 2.75%. The amount of rate adjustment is limited by caps to no more than 2% at the first adjustment, 2% annually thereafter, and 6% for the life of the loan. The loan may be converted to a fixed interest rate mortgage; it is assumable any time during the initial 3-year period and after that period unless the conversion option is exercised; and no penalty is assessed for prepayment.

REQUIREMENTS: Contigent upon satisfactory underwritting approval.
Term: 30 years.

Eligible Properties: Single family one-unit residences (call for information on 2-4 unit properties), including FNMA-approved condominiums and dwellings in Planned Unit Developments (PUDs) and townhouse projects.

MAXIMUM LOAN-TO-VALUE:

TRANSACTION

OCCUPANCY

MAX. LTV
PURCHASE OWNER-OCCUPIED 90%

SECOND HOME

80%

INVESTMENT

N/A

OWNER-OCCUPIED

90%

RATE/TERM REFINANCE SECOND HOME 75%

INVESTMENT

N/A

OWNER-OCCUPIED

75%

CASH-OUT REFINANCE

SECOND HOME

65%
INVESTMENT

N/A

NOTES:

(1) The program guidelines presented here are general.
(2) LTV value is defined as the relationship between the loan amount and sales price or appraised value, whichever is less. Appraised value should be used for refinance transactions with more that one year’s seasoning.
(3) Subordinate financing is acceptable, subject to a maximum combined LTV of 90% for primary home purchases and rate/term refinances. Cash-out refinances are ineligible for secondary financing. When using subordinate financing, the maximum first trust cannot exceed 75%.
(4) No-income verification is acceptable with a maximum LTV of 70% for purchase and rate/term refinances, and 60% for cash-out transactions. Borrowers must be self-employed and verify liquid assets equal to 50% of stated income or $100,000.

  1. Private Mortgage Insurance rates are based on monthly premiums for fixed-rate loans. Other plans are available and different rates apply to loans with temporary buy-downs or adjustable rate features. Monthly premium plans require no premium in advance and are collected each month. Annual premium plans require 1 year’s premium at settlement and the monthly amount with each subsequent payment.