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