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  InterestFirst™ Fixed-Period Adjustable Rate Mortgage

The InterestFirst Fixed-Period Adjustable Rate Mortgage (ARM) offers you the opportunity to make lower monthly payments than with standard fixed-rate products for a predetermined number of years during which you pay interest only.

With the InterestFirst Fixed-Period ARM, you pay only the interest due on the amount of the loan each month for the first 5, 7, or 10 years. Payments during the selected interest-only period typically are offered at interest rates lower than the standard 30-year fixed rate. At the end of the 5-, 7- or 10-year fixed-rate interest-only period, the interest rate begins to adjust annually, and you make fully amortizing payments for the remainder of the term.

This mortgage may be ideal if you are purchasing a new home, but plan to be there for a relatively short time, or if you prefer a lower monthly payment in order to use the cash flow difference more effectively elsewhere.

Loan Features

• Interest-only payments are required for the first 5, 7, or 10 years, depending on the term selected.

• Two commonly used ARM indices, the one-year LIBOR or the one-year Treasury, generally are used to calculate annual adjustments in the interest rate after the fixed interest-only period.

• At the end of the interest-only period, monthly payments change to include re-payment of principal as well as interest. Principal payments are allowed without penalty and are reflected in a reduced interest payment in the next monthly payment during the interest-only period.

• The loan begins to amortize after the fixed-rate interest-only period and is fully repaid at the end of the balance of the loan term (25, 23 or 20 years).

Considerations

• The InterestFirst Fixed-Period ARM offers lower monthly payments during the interest-only period than standard fixed-rate or adjustable rate mortgage products.

• By making a lower payment, you have greater control over your cash flow and can use or invest the difference as you choose.

• Loan payments made after the interest-only period may be higher than would be the case with a typical adjustable or fixed-rate loan.

Example

Here is a hypothetical example:

• $100,000 purchase price

• 20% down payment

• 1% origination fee and 15 days prepaid interest

• 30-year interest only ARM

• Interest only payments for the first five years; principal and interest payment for the remainder of the term, based on a 25-year amortization schedule

• 6% initial interest rate (based on a fully indexed rate of 6.75%)

• 6.547% APR

• $400 monthly payment of interest only for the first five years; monthly payments will include principal and interest after the initial interest-only period, and can increase or decrease at the time of each interest rate adjustment.

The interest rate and APR shown are examples only and are not intended to represent actually available terms.

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