An adjustable-rate mortgage offers an initial interest rate that is lower than most fixed-rate loans. If you’re refinancing to an ARM, this can mean a lower monthly payment than your current loan.
The trade-off is that the interest rate can change periodically, and your monthly payment can go up or down with the rate.
There is an advantage to a lower rate and payment in the early years of your mortgage, but you should consider what an increase in interest rates—and monthly payment amount—would mean to your budget down the road.
For many people in a variety of situations, an ARM is a good mortgage choice, particularly if your income is likely to increase in the future or if you only plan on being in your home for a pre-determined amount of time.
APGFCU offers ARM loan options in several term lengths: 7/1, 5/1, 3/1, and 1/12. Each loan has a fixed rate for the first set number of years, and adjusts every year thereafter, according to the 30- or 15-year amortization schedule of your loan.
To learn more about ARM loan options, call 888-LOAN-391 (888-562-6391) to receive a call from an APGFCU Mortgage Consultant.
Membership eligibility applies. Loans are available only on primary and secondary single-family residences or owner-occupied condominiums located in MD, PA, DE, NJ, VA, NC, SC, and FL. Subject to credit approval.
Loan payment example: Variable rate: APR and payment are subject to increase after loan consummation. Rate is fixed for the first seven years and adjusts annually thereafter, based on a fully indexed rate (one-year Treasury Rate, plus margin). The initial rate can change every year after the first seven-year fixed period by no more than two percentage points, never to exceed five percentage points above the initial rate. Loan payment example: 7/1 ARM payment example for a $180,000 loan with a 3.625% rate and 4.522% APR, the first 84 payments are $820.89 with 12 payments at $992.85 if the rate adjusts to the annual maximum of 5.625%, 12 payments at $1,174.98 if the rate adjusts to the annual maximum of 7.625%, 252 payments at $1,268.38 if the rate adjusts to the ceiling of 8.625%.
Payments do not include amounts for taxes and insurance premiums and the actual payment obligation will be greater.