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Adjustable-Rate Mortgage

Take advantage lower initial payments and start building equity

SCCU offers a variety of Adjustable-Rate Mortgages (ARMs) to help you start building equity while enjoying a lower rate and payment up front. Since ARM rates and payments can go lower or higher in the future, you'll need to fully understand how they work. We'll work with you to determine what option is best for your situation. Our experienced home loan officers can explain the details so that you'll feel confident with your ARM.22

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Product Features

Terms & Fees

Up to 30 Years

Application Fees


Pre-payment Penalties


Intangible Tax


Origination Fee

$1,100 plus .25% of loan amount

Available With

No Closing Costs; Jumbo; Construction

Frequently Asked Questions

You may apply online or reach out to us.

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An adjustable-rate mortgage—also referred to as an ARM or variable rate mortgage—is a home loan that has an interest rate that can go up or down at specified time intervals. Typically, an ARM starts out with an interest rate that's lower than the interest rate on a similar fixed-rate mortgage for a specified time period. When that time period expires, the interest rate may change, which may change the amount of your monthly payment.

At SCCU, we offer a variety of ARMs to suit our members' needs, including options that offer rate adjustment after five, seven, or ten years22. For example, a 5/1 ARM has a fixed interest rate for the first five years of the loan. After the initial five-year period, the interest rate and payment may adjust every 12 months. The interest rate can't increase or decrease more than 2 percent at one adjustment and can't increase more than 5 percent over the life of the loan. To learn more, please reach out to us

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Adjustable-rate mortgages (ARMs) are not for everyone, but the good news is that borrowers have a wide range of mortgage types from which to choose. If you are considering an ARM loan, however, it's important to understand some of the potential downsides:

  • Adjustable-rate mortgage rates can and are likely to change over the life of the loan. An ARM rate may be low for an initial period but could go up afterwards.
  • Some adjustable-rate mortgages include prepayment penalties, so you will want to ask potential lenders for a clear answer on this.
  • Some adjustable-rate mortgages will have a balloon payment at maturity, which could be a substantial amount of money.
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Adjustable-rate mortgages have caps, or limits, on how much the interest rate can increase from one adjustment date to the next. These adjustment caps protect borrowers from extreme changes in rates. Lenders may have three types of caps:

  • The initial adjustment that occurs after the initial fixed-rate term is reached
  • Subsequent adjustment caps that control how much the rate can increase at one time in adjustment periods that follow the first adjustment
  • A cap on the adjustment for the life of the loan, or what the total interest rate increase will ever be
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Typically, the monthly payment and interest rates on adjustable-rate mortgages change at specified intervals, such as every month or year or every three, five, or seven years. The length of time between each interval—at which time the interest rate can be adjusted—is known as the adjustment period.

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Securing a mortgage of any type is often one of the largest financial transactions most people will make, so taking the time to ask potential lenders the right questions is important. To make sure you understand the terms of an adjustable-rate mortgage, ask lenders these questions: 

  • What is the initial interest rate and how long does it apply?
  • How often will my interest rate be adjusted?
  • What is the index that the ARM rate is based on?
  • What is the lender's margin (an additional amount that lenders add to the index rate)?
  • How high or low could the interest rate go?
  • What is the cap on the payment? 
  • Is there a penalty for paying off the loan early?
  • If there is a balloon payment, when would it be due and how much would it be?
  • Does the initial monthly payment include taxes and insurance?
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Each type of home loan has its pros and cons, and ultimately, the mortgage that's better is the one that's best for you. Here are a few things to consider when weighing your home financing options: Adjustable-rate mortgages are initially based on short-term interest rates that are typically lower than interest rates on fixed-rate home loans. That means ARM rates may initially provide lower monthly payments and may give you the opportunity to purchase a more expensive house. But, after the initial rate period, your rate could change, affecting your monthly payment. There are also more types of variable-rate loans, so you may have more choices when looking for home financing that meets your individual needs.

The most important advantages of fixed-rate mortgages include knowing exactly what your monthly house payments will be over time and that you won't have any unpleasant interest rate surprises in the future. Fixed-rate mortgages are also simpler and easier to understand.

Contact our Express Services team to learn more about all of the mortgage options SCCU offers our members.

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ARM loans may be the right choice for your borrowing needs if:

  • Your income is currently enough or is likely to increase enough for you to be able to comfortably make higher monthly payments should your ARM interest rate increase at any adjustment period.
  • You plan to stay in your home for just a few years, so the possibility of paying higher monthly payments in years to come is not a concern.
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HOME LOANS:  Mortgage loans are originated by Space Coast Credit Union, and are subject to credit approval, verification and collateral evaluation. Programs, offers, rates, terms, and conditions are subject to change or cancel without notice. Certain restrictions apply.
These mortgage loan programs constitute first mortgage liens secured by the home and property. Your down payment is determined by the Loan-to-Value ratio. (90% LTV = 10% down payment) Loans exceeding 80% of the appraised value of the home require private mortgage insurance.  Member responsible for any funds needed for closing costs and pre-paid escrow.