Adjustable Rate Mortgage Loan Disclosure & Consumer Handbook on Adjustable Rate Mortgages

You have asked Peoples Exchange Bank for an application for a home loan. This disclosure describes the features of our 5/1 Year ARM which uses the weekly average yield on U.S. Treasury securities adjusted to a constant maturity of one year. INFORMATION ON OTHER ARM PROGRAMS IS AVAILABLE TO YOU UPON REQUEST.

HOW YOUR INTEREST RATE AND PAYMENT ARE DETERMINED

Your interest rate will be based on an index rate plus a margin. Your monthly principal and interest payment will be based on the interest rate, loan balance and loan term. The interest rate will be based on the weekly average yield on U.S. Treasury securities adjusted to a constant maturity of one-year (your index), plus the Lender’s margin. ASK US FOR OUR CURRENT INTEREST RATE AND MARGIN. Information about the index rate is published weekly in the Wall Street Journal and is available in Federal Reserve Statistical Release H15(519) released weekly on the Federal Reserve Board’s website at http://www.federalreserve.gov/releases/h15.

Your interest rate will equal the index rate plus a margin, rounded to the nearest 1/8 percent (0.125%), unless your interest rate "caps" limit the amount of change in the interest rate. The initial rate is not based on the index used to make later adjustments and may be a premium or discount rate. ASK US FOR THE CURRENT INTEREST RATE PREMIUM OR DISCOUNT UNDER THIS ARM PROGRAM.

HOW YOUR INTEREST RATE CAN CHANGE

Your interest rate can change annually after the first 5 years. Your interest rate cannot increase or decrease more than 2.0% at each adjustment. Your interest rate cannot exceed 12.0% or go below 4.0% over the term of the loan.

HOW YOUR MONTHLY PAYMENT CAN CHANGE

Your monthly payment can change annually after the first 5 years, based on changes in the interest rate. For example, on a $10,000 loan, with an initial interest rate of 8.550% in effect in October 2023, the maximum amount that the interest rate can rise under this program is 3.45 percentage points to 12.0%, and, with a term of:

(1) 5 years, the monthly payment can rise from a first-year payment of $205.41 to a maximum of $205.41 in the fifth year,

(2) 15 years, the monthly payment can rise from a first-year payment of $98.77 to a maximum of $113.50 in the seventh year,

(3) 30 years, the monthly payment can rise from a first-year payment of $77.25 to a maximum of $100.41 in the seventh year.

You will 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 adjustment resulting in a corresponding payment change. This notice will contain information about the adjustment, including the interest rate, payment amount, and loan balance. You will also 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.

To see what your payment is (excluding escrow fees), divide your mortgage amount by $10,000; then multiply the monthly payment by that amount. For example, the monthly payment for a mortgage amount of $60,000:

(1) for a 5-year term; $60,000 divided by $10,000 equals six; six times $205.41 equals $1,232.46 or

(2) for a 15-year term; $60,000 divided by $10,000 equals six; six times $98.77 equals $592.62 or

(3) for a 30-year term; $60,000 divided by $10,000, equals six; six times $77.25 equals $463.50.

If you make an application for this ARM program, or any other loan available from us, we recommend that you also read the provisions of the promissory note and the security instrument (which may be a deed of trust, mortgage, security deed, or other security instrument) as well as all other related loan documents, because you will be bound by the terms, promises, and obligations contained in those documents (which will be called "Loan Documents") once they have been signed.

Please remember that this disclosure is not a contract between you and Peoples Exchange Bank and it is not a commitment by us to make a loan to you on any of the terms described in this disclosure. This disclosure is intended solely to provide you with a general description of this loan program. We reserve the right to make changes at any time with regard to any matter covered in this disclosure as a result of a change in policy, law, regulation, or otherwise.