1st Mortgage

LET US GIVE YOU A HAND – OR BETTER YET, AN ARM!

Take advantage of the competitive, low rates that come with an Adjustable Rate Mortgage (ARM) with the security of your loan staying with your local, safe and trusted credit union. Industrial ARMs are re-evaluated at pre-defined intervals, allowing for changes in the market and your personal financial situation, making it possible for us to give you the most current rate. And our fast and friendly loan process is always focused on your needs and unique situation.

Loan Highlights

  • Your loan stays at the Credit Union, we don’t sell our servicing like many other financial institutions
  • Finance up to 80% of the assessed value of your home
  • No application fee
  • Flexible loan fees allow you to choose your option
  • No prepayment/payoff penalty

LEARN MORE ABOUT ARMS

An Adjustable Rate Mortgage (ARM) is a loan with an interest rate that can change periodically. As the rates change, so will your payments.

The changes to the interest rate for an ARM are tied to an Index and Margin. Industrial CU uses the 26-Week Treasury Bill as our Index. The Margin is fixed for the term of the loan and is determined based on an evaluation of your credit and financial health.

ARMs have an initial period in which the interest rate and payments are “fixed”. After the initial period, the rate and payment can change at each Adjustment Period.

WHAT DOES 0/5 MEAN?

The ‘0’ means there is no “teaser” rate period. The ‘5’ is our Adjustment Period – meaning that the rate can change every 5 years from the anniversary date of the loan, based on the current Index on the change date.

RATE CAPS

ARMs are subject to Interest Rate Caps. An Interest Rate Cap puts limits on the amount the interest rate can increase and decrease. There are two types of caps:

  • The Adjustment Cap limits the amount the interest rate can increase or decrease at one Adjustment Period.
  • The Lifetime Cap limits the interest rate increase over the life of the loan.

Industrial ARMs have the following caps: a 3% Adjustment Cap (decrease or increase) and 6% Lifetime Cap.

Here is one example of how an ARM rate may change:

The current interest rate for a Tier 1 borrower is 3.50%, based on the Index (3.25%) and the member’s margin (.25%). In 5 years, on the anniversary date of the loan, the loan will hit its first Adjustment Period.

At the Adjustment Period, the Index is now 4.25% (1% higher than 5 years ago). The Index (4.25%) plus the margin (.25%) equals the new rate of 4.5%. The member’s payment will be adjusted according to the higher interest rate.

5 years later at the next Adjustment Period, the index is now 8% due to high inflation in the economy. Adding the margin (.25%) would make the rate 8.25% – an increase of 3.75%. Since the Adjustment Period Cap for increases is 3%, the new rate will be 7.5%.

Loan rates shown here are current as of:
March 1, 2019

APR = Annual Percentage Rate

Payment Example for a 0/5 Adjustable Rate Mortgage (ARM): For example, on an ARM loan for $350,000 at 3.78% APR, you would make 60 fixed payments of $1,632.01*, then 300 payments at the indexed rate of 3.25% to 9.75%, which might vary. *Payment does not include taxes and insurance.

Payment Example for a Fixed Rate Mortgage: For example, on a fixed loan for $350,000 at 4.01% APR, you would make 179 fixed payments of $2,577.28*, then 1 fixed payment of $2,575.25. *Payment does not include taxes and insurance.

Term Interest Rate Points APR
0/5 Adjustable Rate 3.750% – 5.000% 0.25% 3.78% – 5.04%
15 Year Fixed 3.875% – 5.125% 0.75% 4.01% – 5.26%