Where is the margin disclosed in the documentation for an ARM?

The margin in an Adjustable Rate Mortgage (ARM) is disclosed in the Loan Estimate. This document provides a clear breakdown of the terms of the mortgage, including specific details about how the interest rate is determined. The margin is a fixed value added to the index rate to calculate the fully indexed interest rate that the borrower will pay after any initial fixed-rate period ends.

Including it in the Loan Estimate ensures that borrowers understand the potential changes in their payment amounts associated with the fluctuating interest rates. This transparency is crucial for borrowers to evaluate the full financial implications of an ARM product before committing.

In contrast, the Closing Disclosure primarily summarizes the final loan terms and fees shortly before closing, while the Note contains the borrower's promise to repay the loan but might not detail the margin as explicitly. The Application Form generally collects information from the borrower but does not detail specific terms of the loan such as the margin. Thus, the Loan Estimate is the correct document for disclosing the margin in an ARM, facilitating informed decision-making for the borrower.