Buydown Disclosure

LENDER:

LOAN NUMBER:

BUYDOWN DISCLOSURE

The purpose of this statement is to explain certain aspects of the buydown mortgage for which you are applying, and to have your signature at the bottom of this statement indicating your understanding of the arrangements that will be made on your behalf.

As a consideration for providing you with a home loan with a buydown interest rate plan, we will receive an amount of money sufficient to reduce your monthly payments by $ to $ * for the first twelve (12) months of your loan and by $ to $ * for the second twelve months of your loan and by $ to $ * for the third twelve months of your loan. If you home loan is sold to another investor, that investor will hold the money and credit it to your payments in accordance with the buydown plan.

After the money to fund the buydown plan for the mortgage has been exhausted, your monthly payments payment will increase by $ to $ *. You should also be aware that probable annual increases in taxes or insurance premiums may result in higher monthly escrow payments, and may occur during the buydown plan period.

Your only right to this money will be to have is credited to pay a portion of your payments as they fall due, in accordance with the buydown plan. As the money will represent a payment to finance a buydown agreement, no interest obligation will accrue on the money held. The money will not be used to pay any aps due mortgage payments which are to be paid by you. Unless this is an FHA loan, if you prepay the mortgage during the buydown plan, the money remaining for the future payment will not be refunded.

Additional Terms with respect to the Buydown Agreement for FHA loan ONLY are as follows:

1. The buydown funds will be held and applied consistent with the terms of the above schedule.
2. The buydown funds are not refundable and the borrower’s only interest in the buydown funds it to have them applied to the payments due under the note along with payments made to the borrower.
3. The buydown funds may not be used to pay any past due payments to the borrower.
4. If the mortgage is paid in full during the buydown period, any remaining buydown funds will be credit to the unpaid principal balance of the mortgage.

In the event of a foreclosure of the mortgage which the buydown relates, the lender/investor is entitled to any remaining buydown funds to reduce the mortgage debt.

Please sign below to indicate your understanding and acceptance of the foregoing information.

*principal and interest

1