Disclosure for Adjustable Rate (ARM) Mortgage

Disclosure for Adjustable Rate (ARM) Mortgage

ADJUSTABLE RATE MORTGAGE MEANS YOUR PAYMENT MAY CHANGE IN THE FUTURE. If you are applying for an Adjustable Rate Mortgage loan (referred to in this disclosure as an “ARM”) with Capitol Federal Savings (referred to in this disclosure as “we”, “us”, “our”, or “Lender”) this means that your interest rate and monthly payments may change during the life of your loan. The date or dates on which changes can occur (referred to in this disclosure as “Change Date”) will be specified in the ARM loan documents. This disclosure describes features of the specific ARM that you are considering. We have based this disclosure on recent interest rates, index and margin values, discounts, and fees. Ask us for our current interest rate and margin.

You should carefully read this disclosure and the promissory note, mortgage/deed of trust, and all other documents that you will be asked to sign if we offer an ARM loan to you and you accept it. This disclosure is not a contract or a loan commitment. However, the loan documents once signed will be a contract between you and us. The matters discussed in this disclosure are subject to change from time to time without notice.


HOW YOUR INTEREST RATE IS DETERMINED. Your interest rate will be determined by means of an index that may change from time to time.

The Index. The interest rate change on these ARM programs will be based on an interest rate index (referred to in this disclosure as the “Index.”) The index is the One-Year US Constant Maturity Treasury Rate. Information about the index is available in the Federal Reserve Statistical Release H-15 (www.federalreserve.gov/releases/h15). If the index is no longer available, we will choose a new index that is based upon comparable information.

Interest Rate. The interest rate is based on the Index value plus a margin, rounded to the nearest 0.125 percent. A change in the index generally will result in a change in the interest rate. The amount that your interest rate may change also may be affected by the periodic interest rate change limitations and the lifetime interest rate limits, as discussed below for each ARM Program we offer.

Initial Interest Rate Discount. Your initial interest rate may be discounted and may not be based on the index used to make later adjustments. You should note, however, that if the initial interest rate is discounted, your interest rate may increase on the first Change Date even if the Index remains the same or decreases. Ask us if the current rate is discounted.

Adjustment Notices. You will be notified at least annually if interest rate changes occur. When an interest rate change will also involve a change in your monthly payment, you will be notified in writing (at least 25 calendar days, but not more than 120 calendar days) before the payment at the new level is due. The notice will indicate the adjusted payment amount, interest rate, Index value, and the outstanding loan balance at the time.


INTEREST RATE ADJUSTMENTS. Your interest rate under this ARM can change after 84 months and every 12 months thereafter. Your interest rate cannot increase or decrease more than 2.000 percentage points at first adjustment and 2.000  percentage points per subsequent adjustment from the initial interest rate, excluding any buydown. Your interest rate will never be greater than 4.000 percentage points above the initial interest rate or lower than 2.750 percent (conforming/jumbo loan) or 3.000 percent (super jumbo loan).
HOW YOUR PAYMENTS ARE DETERMINED. Your initial monthly payment of principal and interest will be determined based on the interest rate, loan term, and balance when your loan is closed. If your interest rate changes, your payment will be adjusted to fully amortize the loan by the end of the loan term.

Frequency of Payment Changes. Based on increases or decreases in the index, payment amounts under this ARM loan can increase or decrease substantially after 84 months and every 12 months thereafter. However, your monthly payment amount could change more frequently if there is a change in the taxes, assessments, insurance premiums, or other charges required to be made into an escrow or impound account.

How Your Payment Can Change (“Worst Case Scenario”). After 84 months, your payment can change every 12 months based on changes in the loan term, interest rate or loan balance. For example on a $10,000 loan with a 30 year term and an initial rate of 6.250% (the initial rate in effect December, 2023), which is not based on the index in effect for December, 2023, the maximum amount that the interest rate can rise under this ARM program is 4.000 percentage points to 10.250%, and the payment can rise from an initial payment of $61.57 to a maximum of $89.61 in the ninth year.

Note: To see what your payment would be, divide your mortgage amount by $10,000; then multiply the monthly payment by that amount. (For example, the monthly payment for a new loan amount of $60,000 would be $60,000 divided by $10,000 = 6. Multiply the payment amount by this number, e.g. 6 x $61.57 = $369.42)

Limitations on Interest Rate Payment Changes. Your interest rate will not increase or decrease on the first change date by more than 2.000 percentage points from the initial interest rate, excluding any buydown. After the initial adjustment period, your interest rate will not increase or decrease by more than 2.000 percentage points per year. Your interest rate cannot increase more than 4.000 percentage points above the initial interest rate (excluding any buydown) over the life of the loan.