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#2244934 - 11/02/20 04:03 PM Interest Only + ARM - Loan Product
NoJustNo Offline
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Midwest
How do you disclose the TRID loan purpose for a 1-year interest-only loan that then converts to a 5/1 ARM? The rate for the interest-only period is the same as the introductory rate for the ARM. I've read .37(a)(10) but am still confused.

Is it "1 year interest only, 5/1 adjustable rate" or is it "1 year interest only, 6/1 adjustable rate"?

Seems like the first makes the most sense to me...

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TRID - TILA/RESPA Integrated Disclosures Rule
#2244935 - 11/02/20 04:08 PM Re: Interest Only + ARM - Loan Product NoJustNo
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 77,215
Galveston, TX
Totally depends when the first adjustment occurs - year 6 or year 7 - it is all one loan.
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#2244937 - 11/02/20 04:12 PM Re: Interest Only + ARM - Loan Product NoJustNo
NoJustNo Offline
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Joined: Oct 2013
Posts: 188
Midwest
It's combined interest only + ARM. Interest-only for the first year - then the ARM kicks in and it's fixed for 5 years. So, if loan was originated 1/1/2020 - it would be interest-only through 1/1/2021 then the first adjustment would be 1/1/2026.

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#2244938 - 11/02/20 04:13 PM Re: Interest Only + ARM - Loan Product NoJustNo
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 77,215
Galveston, TX
Then it is a 6/1 ARM from a TRID perspective.
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#2244939 - 11/02/20 04:17 PM Re: Interest Only + ARM - Loan Product NoJustNo
NoJustNo Offline
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Joined: Oct 2013
Posts: 188
Midwest
That's what I was afraid of - so it's "1 year interest only, 6/1 adjustable rate" - right?

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#2244943 - 11/02/20 04:41 PM Re: Interest Only + ARM - Loan Product NoJustNo
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 77,215
Galveston, TX
Correct
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