Cash Flow ARM

The Cash Flow ARM puts you in control of your monthly payments.

Each month, an easy-to-read loan statment lets you choose the payment amount that best suits your financial situation. Pay the minimum amount to free up funds for other uses, or make larger payments for faster equity build-up. It's ideal if your income fluctuates or steadily increases over the years.

Cash Flow ARM Loan features:

1. A fixed interest rate for an initial period; thereafter the interest rate may change monthly.
2. A minimum payment amount that can adjust on an annual basis, subject to a 7.5% annual payment
payment change cap.
3. A 7.5% payment change cap limits how much the minimum monthly payment can increase or
decrease annually.
4. A lifetime interest rate cap that protects you by limiting how high your interest can go.

To make the decision that's best for you, you'll need to understand the features and benefits of each payment option:

1. Minimum monthly payment
2. Interest only payment
3. 30-year amortizing payment
4. 15-year amortizing payment

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Option Adjustable Rate Mortgage Benefits

• Flexibility
• Control of your own money

Option 1 - Manageable payments:

The minimum monthly payment, Option 1, gives you more cash now and keeps your monthly payments manageable. This payment changes annually. The minimum monthly payment is usually recalculated annually thereafter, based on the outstanding principal balance, remaining loan term and prevailing interest rate. The 7.5% payment change cap limits how much the payment can increase or decrease each year.

Option 2 -Pays all the interest:

You can avoid deferred interest by paying the minimum monthly payment plus any additional interest accured during the month. Your payments remain manageable, with no change in your principal balance for that month.

Option 3 - Pays principal too:

This is the fully-amortized payment. It is calculated each month based on the prior month's interest rate, loan balance and remaining loan term. When yhou choose this options, you pay all the interest due and reduce your principal, to pay off your loan schedule.

Option 4 - Builds quick equity:

For faster equity build-up, quicker payoff and substantial interest savings, choose the largest monthly payment option. Option 4 is calculated to amortize you loan based on a 15-year term from the first payment due date.

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Maintain A Low Mortgage Payment:

Four payment options allow you to manage your cash flow and overall financial picture on a monthly basis.

If rates increase, you can pay the minimum amount (option 1, in which case some of your interest would be deferred. Deferred interest, also know as negative amortization, occurs when the montly payment is not sufficient to cover the interest accrued during the prior month.

The unpaid interest is added to the balance of the loan, rather than increasing the current monthly payment.

You can advoid deferred interest and take advantage of the maximum tax benefit in the current year by paying Option 2 or 3.

Rate decreases may result in accelerated amortization, reducing principal or any unpaid interest more rapidily.

Select Your Payment Option With More Flexible Features

After considering your monthly financial objectives, choose the available option that best suits your needs. Just enter the amount of the option selected in the payment coupon section of the loan statement. In addition to the four payment options, your monthly statement will show, if applicable, the total amount of unpaid deferred interest on your loan. You may pay all or part of this deferred interest at any time.

No options will be offered if the loan is delinquent; then the total amount due will be required.

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