# Adjustable Rate Mortgage (ARM) Agreement
**This Adjustable Rate Mortgage Agreement (“Agreement”) is made and entered into as of [Date] by and between:**
**Lender:**
[Name of Lender]
[Address of Lender]
[City, State, Zip Code]
(Hereinafter referred to as "Lender")
**Borrower:**
[Name of Borrower]
[Address of Borrower]
[City, State, Zip Code]
(Hereinafter referred to as "Borrower")
## 1. Loan Amount and Purpose
The Lender agrees to lend the Borrower the principal sum of [Loan Amount] Dollars ($[Amount]), to be used for the purpose of purchasing or refinancing real property located at [Property Address] (the "Property").
## 2. Interest Rate and Terms
### 2.1 Initial Interest Rate
The initial interest rate shall be [Initial Interest Rate]% per annum, which shall be fixed for the first [Initial Fixed Period] months from the date of this Agreement.
### 2.2 Adjustment of Interest Rate
After the initial fixed period, the interest rate will adjust annually on each [Adjustment Date] based on the [Index Name] plus a margin of [Margin Amount]%, per the terms specified below.
### 2.3 Rate Cap
- **Initial Adjustment Cap:** The maximum interest rate increase at the first adjustment shall not exceed [First Adjustment Cap]% from the initial interest rate.
- **Subsequent Adjustment Cap:** The maximum interest rate increase at each subsequent adjustment shall not exceed [Subsequent Adjustment Cap]% per annum.
## 3. Payment Terms
### 3.1 Monthly Payments
The Borrower agrees to make monthly payments of principal and interest based on the current interest rate, adjusted as specified in Section 2.2, and amortized over [Amortization Period] years.
### 3.2 First Payment Date
The first payment shall be due on [First Payment Date] and continuing on the [Payment Due Date] of each month thereafter until the Loan is paid in full.
## 4. Prepayment
The Borrower may prepay the loan in full or in part without penalty. Any partial prepayment shall be applied to the principal balance in accordance with the lender’s standard practices.
## 5. Default
### 5.1 Events of Default
The following events shall constitute an Event of Default:
- Failure to make any payment when due.
- Breach of any other covenant or agreement contained herein.
### 5.2 Remedies
Upon the occurrence of an Event of Default, the Lender may declare the entire principal amount due and payable immediately, together with any accrued interest and fees.
## 6. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of [State].
## 7. Entire Agreement
This Agreement constitutes the entire agreement between the parties pertaining to its subject matter and supersedes all prior agreements, representations, and understandings.
## 8. Amendments
This Agreement may be amended only by a written agreement signed by both parties.
**IN WITNESS WHEREOF, the parties have executed this Adjustable Rate Mortgage Agreement as of the date first above written.**
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**Lender**:
Signature: ___________________________
Name: [Lender's Name]
Title: [Lender's Title]
Date: ________________________________
**Borrower**:
Signature: ___________________________
Name: [Borrower’s Name]
Date: ________________________________
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**Witness**:
Signature: ___________________________
Name: [Witness Name]
Date: ________________________________
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**Notary Public**:
Signature: ___________________________
Name: [Notary Name]
My Commission Expires: ______________
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*This is a template and should be tailored to specific needs and regulations. Always consult with a legal professional prior to execution.*