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Adjustable Rate Mortgage Note
1. Parties. This Note is for value received by [names] of [address] (Borrowers) from [bank], a [state] banking institution with principal place of business at [address] (Bank).
2. Promise to Pay and Obligation. Borrowers jointly and severally promise to pay the principal sum of ---------- dollars ($----------), plus interest, to the order of Bank, or Bank's assigns, at Bank's principal place of business, or any other place as the holder of this Note may state in writing. The amount due to Bank will be paid by Borrowers on or before [date]. This amount due consists of the principal of ---------- dollars ($----------) plus interest, from [date], on the balance of the principal that remains unpaid, at the rate of ---------- percent (----------%) per year for the next [number] years.
3. Change in Interest Rate. The interest rate to be charged on the principal will change on each anniversary date of this Note to a rate equal to the interest rate of ---------- percent (----------%), adjusted upward or downward by the difference in the Index between the date of this Note and that anniversary date. The term "Index" means the index computed by [party computing index].
4. Payment Terms.
a. Current Terms. Principal and interest are payable in equal monthly installments of ---------- dollars ($----------), beginning [date] and on the first day of each month thereafter.
b. Change in Terms. The first [number] monthly installments will be for such sum of ---------- dollars ($----------) each. Thereafter, the monthly installments will be increased or decreased on the [number] anniversary date of this Note, for the next [number] years, if the rate of interest is increased or decreased as provided in Paragraph 3.
5. Late Payments.
a. Interest on Default. If any part of the principal or interest remains unpaid after maturity or after any default under this Note that remains uncured, the interest rate on the remaining unpaid principal will be the interest rate stated in Paragraph 2, as changed from time to time pursuant to Paragraph 3, plus ---------- percent (----------%) per year.
b. Overdue Installments. If payment of any installment is more than [number] days late, Bank may charge a late charge of ---------- percent (----------%) for each dollar overdue. This late charge may not be greater than the maximum allowed by law.
6. Application of Paid Installments. Borrowers' monthly payments will be applied first to accrued interest on the unpaid balance of the principal for the month that has just ended and then to amortization of the principal.
7. Security. This Note is secured by a mortgage, dated [date], which has been executed, acknowledged, and delivered to Bank by Borrowers.
8. Remedies on Default. If Borrowers fail to
(a) pay the principal or interest or any installment due on this Note; or
(b) comply with the terms, conditions, or provisions of the mortgage securing this Note; or
(c) comply with the terms, conditions, or provisions of any other agreement entered into by Borrowers with Bank, all unpaid indebtedness of Borrowers will become immediately due and collectible at the option of Bank. If Bank delays in exercising this option, that delay will not operate as a waiver or prevent its exercise during the period of the existing or any later default.
9. Waiver of Notice and Presentment. The makers and indorsers of this note severally waive presentment of payment, protest, notice of protest, and notice of nonpayment of this Note.