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Prime Indexed Loans

[Features & Benefits]   [Frequently Asked Questions]

This pricing option indexes the customer's loan rate to the Prime rate as reported in the Wall Street Journal. The national Prime Rate is defined as: that rate charged on corporate loans by at least 75% of the nation's largest 30 banks. The difference between the customer's rate and the Prime is called the "Index Margin."

This option may be attractive to you if you like the flexibility of a floating rate, but would like the rate linked to a common external market index.

Loan Options

You select the frequency at which the index margin will be reset. The index margin can be reset every 12 or 36 months. The new index margin and interest rate will be based on the rate charged for new loans that are in the same pricing category at the time the index margin is reset.

Rate Commitments

Rates for this product are quoted at a margin (index margin) over or under Prime. If Prime changes any time after a rate is committed but before closing, the customer's rate will be automatically changed the month after closing to equal the current Prime rate plus the defined index margin.

Rate Changes

Loans in this product may re-price on a monthly basis, depending on changes in the Prime rate. The new rate will be based on the prime rate as of the 10th of the preceeding month. For example, the rate for the month of July is based on the Prime rate as published on June 10th, plus or minus the index margin. If your rate is scheduled to change, a Rate Change Disclosure is automatically sent to you approximately 10 days before the effective date of the change.

The index margin is adjusted every 12 or 36 months, depending on the product selected. On the date the index margin is to be adjusted, a new index margin will be set on the loan and the loan rate will be adjusted accordingly. If the customer's rate changes as a result of the new index margin, a Rate Change Disclosure will automatically be sent to the customer.

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Features and Benefits

Feature	Benefit
Rate is indexed to the national Prime rate.	You can easily anticipate rate changes on your loan by obtaining the national Prime rate, which is readily available in the media.
Loan is quoted as a margin to Prime (i.e. x.xx% over or under Prime).	GreenStone's rate can be easily compared to competitors. Also, you may be more familiar with prime rates than with GreenStone variable rates. Therefore, if a floating rate is desired, this product can meet your needs.
Index margin adjusted automatically every 1 or 3 years.	This provides you with the flexibility to obtain a lower rate today than if the rate was indexed to Prime for the life of the loan. Also, by automatically adjusting the margin, there is no need for balloons - this eliminates concerns about your loan being called at the balloon, saving time renegotiating terms, providing information and signing documents.
Low cost conversion to other pricing options.	You have the option of converting to a fixed rate or other product at any time with no prepayment penalty. This allows you to take advantage of favorable rate environments, thereby reducing interest cost.

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Frequently Asked Questions

Question	Answer
Why does the index margin adjust ever 12 or 36 months?	Prime is an interest rate that is administered by banks and does not necessarily follow the financial market rates. For example, the difference between Prime and the 3-Month Treasury Rate has changed from .90% to 2.90% during the past 7 years. By allowing the Index Margin to adjust periodically, we can provide you a more favorable rate without needing to build in additional interest rate risk margin.
If rates increase, or fixed rates decrease can I convert to another product?	Similar to other adjustable rate loans, you have the option to convert to another product if you desire. Conversions are simple to complete and generally only require a nominal conversion fee.
Will changes in the Prime Rate cause my payment amount to change?	When interest rate change, your payment amount will be adjusted to reflect the change.

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