Adjustable Rate Mortgages

With a fixed-rate mortgage, the interest rate and your monthly principal and interest payment remain the same throughout the life of your loan. With an adjustable-rate mortgage (ARM), the interest rate changes periodically, and your payments could go up or down.

With an LOC Credit Union Adjustable Rate Mortgage, you'll have the option to pick a lower rate for an initial term of either five or seven years.

No. Although they're not meant for everybody. Because ARMs typically have lower introductory rates than fixed-rate mortgages, they can be a good deal for homebuyers who want lower monthly payments in the beginning and are able to afford the possibility of higher payments after the introductory rate period. They may also be a preferred product if you only plan to live in your home for less than 10 years.

Yes. ARM loans do have a rate limit for the maximum interest rate of the duration of the loan, as well as the maximum amount your interest rate may increase with each adjustment. Most lenders have a 6% life cap on the rate change compared to LOC at 5%

Yes, it’s possible for your ARM rate to go down if interest rates decrease.

Yes, you can refinance an ARM just like any other loan. You may refinance into a fixed-rate mortgage, or a new ARM. Buyers will commonly refinance when reaching the end of the introductory period of the ARM loan. LOC ARMs are unique in that they also offer a conversion feature to move to a fixed rate for a small flat fee as opposed to having to do a costly refinance and have a loan re-underwritten.

If you plan on moving or selling your home within five to seven years, or before the adjustment period of the loan, or if interest rates are high when buying your home. It may also be beneficial to use if you believe you may be making significant additional principal payments in your first 7 years.

A conversion is a unique feature of LOC Adjustable Rate Mortgages that allows you to easily convert the loan from an adjustable loan to a fixed rate loan.

A flat fee of $500. There are no additional appraisal, credit, or title company costs.

Yes.

• The member needs to initiate the request between months 13 and 96 of the loan. It does not need to be on an anniversary date like some lenders may require.
• Loan must be current within the past 24 months.
• Property must be the members primary residence.

• A buyer can assume your existing loan at the original note rate and can avoid thousands of dollars of closing costs associated with a new purchase loan
• If current market rates are much higher than your note, having an assumable loan makes the purchase of your home more attractive

Approximately $500

The assumable feature of an Adjustable Rate Mortgage allows a qualified and approved buyer to take over the balance of your loan when they purchase your home. They will then be liable to make payments, while you are released.