Fannie Mae® Hybrid Adjustable Rate Mortgage (ARM)
Arbor’s Hybrid ARM product offers a 30-year mortgage loan, comprised of an initial term where interest accrues at a
fixed-rate, after which it automatically converts to accrue interest at an adjustable-rate for the remaining term.
|Loan Term||30-year loan term with an initial 5-, 7-, or 10-year fixed-rate term, followed by an adjustable rate term.|
|Maximum LTV||Up to 80%.|
|Minimum DSCR||1.25x Actual Amortizing DSCR. Other DSCR constraints may be required depending on market location.|
|Rate Lock||30- to 180-day commitments. Borrowers may lock a rate with the Streamlined Rate Lock or Early Rate Lock options.|
|Interest Rate Adjustments||Starting in the adjustable-rate period, adjusts based on changes to the underlying index and is equal to the Index plus the Margin.|
|Index During Adjustable-Rate Term||6-month LIBOR.|
|Margin During Adjustable-Rate Term||0.80%, plus the Guaranty Fee and the Servicing Fee in effect at Rate Lock.|
|Prepayment Availability||Flexible prepayment options available during the fixed-rate term, including yield maintenance and declining prepayment premium. No prepayment fees during the adjustable-rate period.|
|Maximum Interest Rate During The Adjustable-Rate Term||Starting with the conversion from the fixed interest rate to the adjustable interest rate and thereafter, maximum semi-annual interest rate adjustment of 1% up or down.
Maximum lifetime interest rate to Borrower capped at 5% over the initial fixed rate.
|Lifetime Interest Rate Floor||The interest rate will never be less than the Margin.|
|Supplemental Financing||Not available.|
|Accrual||30/360 or Actual/360.|
|Recourse||Non-recourse execution with standard carve-outs for “bad acts” such as fraud and bankruptcy.|
|Escrows||Replacement reserve, tax, and insurance escrows are typically required.|
|Third-Party Reports||If underwriting to Small Mortgage Loans, then streamlined inspection and Environmental Screening using the ASTM E-1528-14 protocol, otherwise, standard third-party reports required, including Appraisal, Phase I Environmental Site Assessment, and Property Condition Assessment.|
|Application Deposit||$10,000. Covers estimated processing and legal fees.|
|Assumption||Loans are typically assumable, subject to review and approval of the new Borrower’s financial capacity and experience.|