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Adjustable-Rate Mortgage
Have you considered an adjustable-rate mortgage with lower rates?
Features
Are you looking to buy a new home but high fixed mortgage loan rates are making it difficult?
An adjustable-rate mortgage (ARM) might be a good option. This type of mortgage offers lower initial rates and is particularly useful during times of high interest rates or if you don't plan on staying in your new home for a long time.
Initially, you'll receive a lower interest rate that is fixed for a specific period (usually five or seven years), resulting in lower monthly payments. After the initial fixed-rate period, your payment may adjust annually, depending on the market conditions, and your payment will go up or down accordingly.
ARMs may be a great option depending on your circumstances. Your mortgage specialist will explain the pros and cons and help you determine if an ARM is the right choice for you.
- Interest rate will be fixed for five to seven years and then adjusts annually
- 30 -year term
- Finance up to 95%* or 100% through ECU 100 Mortgage
- No prepayment penalty
- Reduce your rate by paying discount points
*Certain restrictions apply. Example: 30-year fixed rate loan of $150,000 with a 10% down payment, an annual interest rate of 3.875%, and an APR of 3.984%, would result in a 360 monthly principal and interest payment of $705.36. Payment does not include amounts for taxes and insurance premiums. The actual payment will be greater if taxes and insurance are included.
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Rates
Adjustable Mortgage Loan Rates
| Term | Rate1 | APR2 | Points |
|---|---|---|---|
| 5/1 ARM | 5.500% | 6.731% | 1.000% |
| 7/1 ARM | 5.750% | 6.659% | 1.000% |
Rates accurate as of December 13, 2024 and are subject to change.
All rates are subject to change without notice and will be based on your credit history, down payment amount, property type, loan purpose, etc.
1Rates are based on a purchase transaction with a 20% down payment.
2APR is based on $100,000 loan amount for an 80% LTV purchase and reflects any pre-paid finance charge.
Calculators
Purchasing or refinancing a home can be stressful, leaving you asking lots of questions! Should you buy or rent? Will refinancing save you money? How much will your monthly payment be? Check out our calculators designed to answer these questions and more!
Compare Mortgages
With so many choices, how do you know which loan is right for you?
See the chart below to see the unique features of each. For additional information, please give us a call at 800.999.2328.
| Loan Type | Maximum Loan to Value | Term | Mortgage Insurance | Prepayment Penalty |
|---|---|---|---|---|
| Fixed & Adjustable Rate Mortgages | 97.00% | 15/20/30 year | Yes | No |
| Federal Housing Administration (FHA) | 96.50% | 15/30 year | Yes | No |
| USDA | 100.00% | 30 year | Yes | No |
| First Time Home Buyers Program | 105.00% | 30 year | No | No |
| ECU 100 Mortgage | 100.00% | 15/20/30 year | No | No |
| Veterans Administration (VA) | 100.00% | 30 Year | Yes | No |
| ECU Purchase Plus | 105.00% | 15/30 Year | No | No |
FAQs
What is an Adjustable-Rate Mortgage?
An adjustable-rate mortgage (ARM) is a home loan with an interest rate that can change periodically. This means the monthly payments can go up or down. An ARM begins with a lower interest rate, which means your monthly payment will be more affordable, at least for as long as the rate is fixed.
What does a 5/1 ARM mean?
The most popular adjustable-rate mortgage is the 5/1 ARM. The “5” in 5/1 means the ARM’s introductory rate lasts five years. After that, the interest rate can change every year. Some lenders offer 3/1, 7/1, and 10/1 ARMs.
How is the interest rate determined on an ARM?
After the fixed period ends, an ARM’s interest rate moves up and down with the index interest rate, which is set by market forces and published by a neutral party. To set the ARM rate, the lender takes the index rate and adds an agreed-upon margin.
Is there a limit to how much your payment amount can increase with an ARM?
Yes. You’re protected from substantial year-to-year increases in monthly payments because ARMs come with caps limiting the amount by which rates and payments can change.
Who should consider getting an ARM?
Homeowners who want lower initial payments or a more mobile first-time homebuyer who plans to move in a few years. Also, an ARM could be a good choice if you’re advancing in a career that could require you to move to another city within a few years.