Construction Loan Note Rider (SAMPLE)
Used for adjustable rate construction loans
Construction Loan Note Rider
This Adjustable Rate Construction Loan Note Rider (Rider) is incorporated into and shall be deemed to amend and supplement a note (the Note) in the amount of $ Of even date, executed by the undersigned,
(Borrower) to (Lender) and secured by a mortgage (the Mortgage) of even date.
Notwithstanding anything to the contrary in the Note, Borrower and Lender agree as follows:
1. Installments, Initial Rate and Change Dates. During the construction period:
a. Interest only on funds advanced under the loan (the Loan) to Borrower shall be payable in consecutive monthly installments. The first installment shall be due and payable on the first day of the month following the date of the first disbursement under the Loan, and the remaining installments shall be due and payable on the first day of each month thereafter.
b. Interest under the Note shall initially accrue (calculated on the daily principal balances from time to time outstanding and computed on the basis of a 360-day year for the actual number of days elapsed) at the rate of percent ( %) per annum (Initial Rate). The Initial Rate will change as herein under set forth.
c. The interest rate under the Note may change on first day of each month and on that day every month thereafter through and including the Construction Phase Expiration Date, as hereinafter defined. Each date on which the interest rate could change is called a Change Date. The Construction Phase Expiration Date shall be that date which is the first to occur of (I) or (ii) that date when the Borrower shall have received a certificate of occupancy for the improvements constructed on the land encumbered by the Mortgage and the Lender shall have inspected and approved such improvements; provided, however, if the Borrower shall not have received a certificate of occupancy for said improvements and the lender shall not have approved same by the date set forth in (I) above, the Construction Phase Expiration Date shall be extended for up to months and the Borrower's failure to obtain a certificate of occupancy and Lender's not having approved the improvements as aforesaid by such extended date shall be a default under the Note, this Rider and the Mortgage; provided further, however, the rate adjustment dates and the maturity date under the Note shall not be thereby extended.
d. Beginning with the first Change Date, the per annum interest rate will be based on an index (the Index) which shall be the Prime Rate as announced from time to time by Citibank, N.A., New York (the Prime Rate). The most recent Index figure available prior to the Change Date will be used and is called the Current Index. If the Index is no longer available, the Lender, in its sole discretion, will choose a new index based on comparable information.
e. Before each Change Date, the Lender will calculate the new interest rate by adding one and one half percent
(1.50%) per annum to the Current Index, which shall be the new interest rate until the next Change Date, subject to a minimum rate of percent ( %).
f. The new interest rate will become effective on each Change Date. Borrower shall pay the amount of the new monthly payment beginning on the first monthly payment date after the Change Date until the amount of the monthly payment changes again.
2. Conversion to Permanent Loan. On the first day of the month following the Construction Phase Expiration Date, the interest rate and monthly payment will be due and payable as set forth in the Note.
IN WITNESS WHEREOF, the borrower has executed and delivered this Adjustable Rate Construction Note Rider on the date of the Note.
Borrower:
(Seal) (Seal)
(Seal) (Seal)