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.
| Benefits |
|
| Eligibility |
|
| Loan Term | 30-year loan term with an initial 5-, 7-, or 10-year fixed-rate term, followed by an adjustable rate term. |
| Amortization | 30 years. |
| 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 | 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. |
| Assumption | Loans are typically assumable, subject to review and approval of the new Borrower’s financial capacity and experience. |
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