- Floating Rate - A floating interest rate is not locked in and is moving with the current interest rate market. A "Floating Rate" is not the same as an "Adjustable Rate Mortgage (ARM)."

- Construction Rate - The construction rate is used to determine the interest only payments during construction. This rate locks in 5 business days before initial closing. It is a fixed rate during the construction term.

- Locked Rate - An interest rate is locked when both the borrower and American Home Bank formally accept the interest rate for the permanent loan. A rate is locked with American Home Bank for a predetermined amount of time from 30-360 days.

- Construction Loan Deposit - 1% of the mortgage amount is collected at initial settlement as a deposit. In the case of construction loans, the 1% construction loan deposit is used to offset the modification fees incurred when the loan converts from the construction loan into the permanent mortgage. It cannot be used towards a rate lock.

- Expired Rate - A rate should be locked prior to modification, giving enough time to complete the construction of the home, allow final inspections to occur and to complete all paperwork for the new home. If the borrower does not settle or modify the permanent loan within the rate lock period, the rate lock expires.

- Automatic Rate Lock - If the borrower fails to lock in the permanent interest rate 5 business days prior to modification, American Home Bank automatically locks in the interest rate.

- Float Down Option - In the event of a drop in interest rates, a borrower with a locked interest rate has the option of lowering or "floating down" the permanent interest rate before settlement. In the case of construction loans, the float down can occur before modification. There may be a fee associated with the float down option.

*** Please Note: borrowers want to be very aware of how rates are moving.To track interest rates,simply call 877-226-5242 and ask for the Secondary Department ***