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Variable Rate Construction Loan

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Question: 
I have a lender doing an 18 month variable rate construction loan for a borrower's homestead. Since the loan is over one year, doesn't it need to be done as an ARM loan? Or, since the construction loan is totally separate from the perm., does it matter?
Answer: 

If the term is greater than 12 months, secured by the principal dwelling and and the rate may change during the term it is subject to the disclosure requirements of Section 226.19(b). You should also look at the definition of a principal dwelling in the Official Staff Commentary at Section 226.2(a)(24)(3).

First published on BankersOnline.com 4/18/05

First published on 04/18/2005

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