What is an Adjustable Rate Mortgage (ARM)?
It is a mortgage with an interest rate that is linked to an economic index. The interest rate and your payments are periodically adjusted up or down as the index changes.
Our ARMs are 5/1 meaning the rate is fixed for 5 years, thereafter it may be adjusted once annually. The loan may be converted to a fixed rate loan after the initial period.
When is an ARM a good alternative to a traditional fixed rate mortgage?
Here are a few examples of why an ARM may be the perfect solution.
1. ARMs have lower interest rates, which means that your payment will be less or that you may qualify for a larger loan.
2. If you plan on selling that house within 5 years an ARM is a good idea because you can take advantage of the lower interest rate.
3. If you expect your income to increase within 5 years an ARM gives you the flexibility to pay lower payments now.
If you want to discuss your particular situation with a loan expert contact:
Denise Williams, Mortgage DIvision Manager
CUCORP, Inc. (a subsidiary of The Tennessee Credit Union)
Find out more about all of the mortgage products offered by CUCORP, INC.