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Unformatted text preview: e nearest one–eighth. Using the new interest rate and the remaining term, the lender will calculate the new monthly payment that would be required to pay the loan off over the remaining term. Subsections D, E, and F deal with limiting the increase in the interest rate. Subsection D limits the interest rate increase or decrease to no more than 1 percent in any 12–month period. In addition to limiting the amount of increase per adjustment date, the note states the interest rate the borrower will pay will not be greater than _____ percent or less than _____ percent. This percentage will not be more than the initial interest rate plus the margin of 5 percent. Subsection E establishes the effective date of changes, and Subsection F states the time, method, and content of the rate and payment change notice the lender must give to the borrower. Section 5, Borrower's Right to Prepay, is similar to the fixed–rate note explained earlier. Section 7, Borrower's Failure to Pay as Required, gives the lender the right to impose a late charge if the payment is not received usually by the 15th of the month. In addition, it states that if the borrower does not pay on the date the payment is due, he or she will
9-16 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 9: FIXED RATE MORTGAGE AND ALTERNATIVE MORTGAGE INSTRUMENTS
be in default and, if the borrower does go into default, the lender may send a notice that the borrower is in default. Finally, in this section the borrower agrees to pay the lender for his or her costs in enforcing the note. The remainder of the note is very similar to the fixed rate note and is self–explanatory. Form 9-1: Adjustable Rate Note ( 4 pages) Dynasty School (www.dynastySchool.com) 9-17 REAL ESTATE FINANCE 9-18 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 9: FIXED RATE MORTGAGE AND ALTERNATIVE MORTGAGE INSTRUMENTS Dynasty School (www.dynastySchool.com) 9-19 REAL ESTATE FINANCE 9-20 Licensing School for Appraisal, CPA, Contr...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10