What is an adjustable rate mortgage (ARM) loan?
It is a mortgage loan whose interest rate may vary after an initial 3, 5 or 7 year fixed term. This loan can be used to finance the purchase of a residence or to refinance an existing mortgage loan. Qualifying properties include primary residences, second homes or investment properties.
Some Features of this Product:
Variable interest rate after an initial fixed term
6% lifetime cap over the original rate
Maximum loan $1,000,000.00
Interest rate increases and decreases are limited to a 2% per year cap
No prepayment penalty
No negative amortization
5/1 Arm is our program that is fixed for 5 years at the rate determined by the CU, then at the end of the 60 month payment the rate becomes adjustable and can adjust every 12 months. The 2.75 % margin is used for the ARM products. It is the rate spread that is added to the FNMA mandatory (index) rate to determine the rate to be used for the next 12 months.
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