Adjustable-rate mortgages are a great way to save on closing costs. Although ARMs are not fixed-rate loans, they can suit many homebuyers. At SCCU, our adjustable-rate mortgages are friendlier than others--we offer them as five, seven, or ten-year adjustable rates.
ARMs can be confusing, so here's some information regarding ARMs at SCCU:
HOW YOUR INTEREST RATE AND PAYMENT ARE DETERMINED:
- Your interest rate will be based on an index plus a margin
- Your payment will be based on the interest rate, loan balance, and loan term
- The interest rate will be based on the weekly average yield on United States Treasury Securities adjusted to a constant maturity of 1 year, plus our margin
- Information about the index is published weekly in the Wall Street Journal
- Your interest rate will equal the index rate plus our margin unless your interest rate “caps” limit the amount of the change in the interest rate
HOW YOUR INTEREST RATE CAN CHANGE:
- Your interest rate is fixed for the first 60, 84, or 120 months
- After the first 60, 84, or 120 months your interest rate can change yearly
- Your interest rate cannot increase or decrease more than 2 percentage points per year
- Your interest rate cannot increase or decrease more than 6 percentage points over the term of the loan
- Your interest rate has a floor of the initial interest rate.
HOW YOUR MONTHLY PAYMENT CAN CHANGE:
- Your monthly payment can increase or decrease substantially based on annual changes in the interest rate
- Payment Example: On a $200,000.00 10/1 Adjustable Rate Mortgage (ARM) amortized over 30-years with an initial interest rate of 2.375% in effect August 2020; the maximum amount the interest rate may increase under this program is 6 percentage points or up to 8.375% over the life of the loan. The first 120 payments will be $777.31. If the rate were to adjust to 4.375%, the next 12 months of payments would be $998.57. If the rate were to adjust to 6.375% the next 12 months of payments would be $1247.74. If the rate were to adjust to the cap of 8.375%, the next 12 months of payments would be $1520.14. Taxes and insurance premiums are not included in the payment example and the actual payment obligation may be greater.
You will be notified in writing 30 days before the rate change takes effect. This notice will contain information about your interest rate, payment amount, and the loan balance.
All loans are subject to approval. Membership eligibility required.