BALLOON MORTGAGE LOAN PROGRAM
(This is neither a contract nor a commitment to lending)
This Balloon program Disclosure describes the features of the balloon mortgage you are considering.
General Description
You have applied for a Balloon mortgage. A balloon mortgage is a fixed rate loan, with payments amortized for 30 years. At the balloon date the unpaid balance is due. The purpose of this disclosure is to provide you with a general description of Seattle Metropolitan Credit Union's Balloon mortgage programs. The following disclosure of basic terms and conditions is intended only for your reference. The specific, detailed information relating to your loan will be disclosed in your loan note, deed of trust, and other documents at loan closing.
HOW YOUR BALLOON MORTGAGE WILL WORK
Interest Rate: • The interest rate offered by Seattle Metropolitan Credit Union on a balloon loan will be specified before the closing date and will be based on current market conditions. The initial rate is substantially lower than the conventional 30 year fixed rate loan. Additional information concerning interest rate locks will be provided. Balloon Payment: At the balloon date (balloon maturity date) the loan is due and payable in full.
•
Monthly Payments: • When a loan is made, Seattle Metropolitan Credit Union determines your monthly payment based upon a loan amortization schedule. An amortization schedule is calculated on the total amount borrowed, the interest rate charged and the repayment term of the loan. For the initial term on a balloon mortgage, the monthly payment will be amortized on the initial interest rate, the total amount, and a 30 year borrowing term.
PO Box 780 ▪ Seattle, WA 98111 ▪ Phone: (206) 398-5888 E-mail: relending@smcu.com ▪ www.smcu.com
•
The amortization schedule assumes all monthly payments are on time and there are no prepayments, late payments, or missed payments. the term "monthly payments” as used here, refers only to the principal and interest payment and not to any additional amounts that may be required each month for taxes insurance or other charges for your home.
Eligible Property: • A Balloon mortgage must be secured by a 1-4 unit property. Reserve Requirements: • In addition to the monthly principal and interest payment, your loan document will contain a provision requiring you to pay a monthly amount equal to 1/12 of the estimated annual taxes, assessments, insurance premiums and other costs related to your home. These reserve funds will be deposited in an interest bearing reserve account for you. Seattle Metropolitan Credit Union may waive the reserve requirement if the total loan to value is 80% or less. The reasons for including reserves in your payment are to ensure the priority of the mortgage, to maintain the security for the loan and to help a borrower budget the costs of these required payments each year.
•
If you fail to make these payments, Seattle Metropolitanl Credit Union may advance the amounts due, and you would be required to repay any advance within 30 days. If you fail to repay these amounts, a default would occur and the Credit Union could declare the loan due and payable in full. If the default is not timely cured, Seattle Metropolitan Credit Union could exercise other rights under the loan terms. This could result in the forced sale of your home, in accordance with applicable laws and regulations.
Fees & Closing Costs: • You will incur certain charges by Seattle Metropolitanl Credit Union and others in originating a mortgage. Some examples of these costs:
• • • • •
Appraisal fee Title insurance fee Escrow fee Origination fee(points)
Seattle Metropolitan Credit Union will give you a good faith estimate of these charges within three days of application.
Prepayment Option: • You may prepay this loan in whole or in part at anytime without penalty. A prepayment may be a lump sum payment, part of the remaining balance, or in the form of larger than required monthly payments. The loan becomes due and payable according to the loan documents at the balloon maturity date. Additional payments made during the term will lower the balance due on the balloon maturity date. Prepaying will Not lower your minimum monthly payment. Due On Sale Requirements & Assumability:
PO Box 780 ▪ Seattle, WA 98111 ▪ Phone: (206) 398-5888 E-mail: relending@smcu.com ▪ www.smcu.com
•
Conventional loans are not assumable. The loan is due and payable if all or part of the property is sold or any interest therein is transferred. The loan documents specify the procedures for this option.
Your Obligation
Your loan documents will contain promises and obligations requiring you to do certain things in a timely fashion. Some examples of those promises and obligations:
• • • •
You promise to pay all sums due under the loan documents; this includes all monthly payments of principal and interest, and all payments of monthly reserves. You promise to pay all taxes, assessments and other charges and liens connected with the property securing the loan. Your obligation to keep the property, securing the loan, in good repair, and to maintain adequate insurance on the property. Your obligation to comply with all other terms and conditions in the loan documents.
If you violate any promises or obligations in the loan documents, a default will occur. This means all sums owed could become immediately due and payable. In addition, if the default is not promptly cured, other remedies per the loan documents may be exercised. For example, funds for unpaid taxes or insurance may be advanced, to repay the loan, in accordance with applicable laws and regulations.
•
This description of the Balloon Mortgage program is not a contract between you and Seattle Metropolitan Credit Union. It is not a commitment to make a loan. It is provided solely for your information. ACKNOWLEDGEMENT Borrower(s) hereby acknowledges receiving a copy of this Balloon program description. ___________________ Date ___________________________________ Borrower ___________________________________ Borrower ___________________________________ Borrower ___________________________________ Borrower
PO Box 780 ▪ Seattle, WA 98111 ▪ Phone: (206) 398-5888 E-mail: relending@smcu.com ▪ www.smcu.com