FOR VALUE RECEIVED, [name], residing at [address] (Mortgagor), agrees to pay to the order of [name] (Mortgagee) at its offices at [address], or such other place it designates, the sum of [$ amount], together with any other sums that may be owing to Mortgagee by Mortgagor, with interest on the total indebtedness at the rate of [percent] per annum from [date] to [date].
The interest rate in this Note will be subject to adjustment every five years from the date hereof during the term of the Mortgage. Each five-year period of the Mortgage will be reviewed by Mortgagee [number] days before the period's expiration on the basis of the following economic index: [describe] (Index). If the Index has increased or decreased, the interest rate on the total indebtedness for the next five-year period will be adjusted to reflect that increase or decrease. If no change occurs in the Index, the interest rate for the current five-year period will be the effective interest rate for the next five-year period.
No matter how large an increase in the Index there might be for any five-year period, the interest rate in this Note cannot be increased more than [number] percentage points above the initial rate or more than [number] percentage points above the rate for the five-year period immediately preceding. The dates on which interest rate adjustments or continuations of the current rate will take effect for each five-year period are: [list dates].
Mortgagee, in its determination of an increase or decrease in the interest rate, will not take into consideration any increase or decrease in the Index during the [number]-month period preceding the effective date of an interest rate adjustment for any five-year period during the term of the Mortgage. Mortgagee will adjust the interest rate during the [number]-day period before the end of each five-year period during the term of the Mortgage. Mortgagee will adjust the interest rate during the [number]-day period before the end of each five-year period. On or before the [day] of each such adjustment period, Mortgagee will deliver to Mortgagor a written notice of intent to increase, decrease, or maintain the current interest rate for the next five-year period. Within [number] days of receiving such written notice, Mortgagor will notify Mortgagee in writing of his acceptance or rejection of the interest rate adjustment. If Mortgagor rejects a rate increase or fails to notify Mortgagee of his intention before the effective date of the next five-year period, Mortgagee will have the right to accelerate the total indebtedness with interest to date at the rate in effect during the five-year period in which the acceleration takes place. However, Mortgagor, within [number] days of being notified of any rate increase, may elect to prepay without penalty the total indebtedness, including interest to date, at the rate in effect during the five-year period in which Mortgagor prepays the total indebtedness.
If Mortgagee notifies Mortgagor that the interest rate is to be increased or decreased for any five-year period during the term of the Mortgage, then Mortgagee may effect such adjustment by the following means:
1. Adjusting the monthly debt service to reflect the adjustment in the interest rate so that the equal monthly installments will result in full payment, within the original term of the Mortgage, of the then unpaid principal balance together with all interest due;
2. Extending or reducing the Mortgage term to the extent necessary to reflect the amount of interest due based on the revised number of monthly installments needed to amortize the loan without changing the amount of the monthly debt service stated herein. In no event, however, will the term of the Mortgage be extended to exceed [number] years from the date hereof; or
3. By combination of the adjustments described in Paragraphs 1 and 2.
[Signatures]
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