5/5 Adjustable Rate Mortgage (ARM)

Take advantage of the competitive, low rates that come with an Adjustable Rate Mortgage (ARM). 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.

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 value of your home
  • No prepayment/payoff penalty
  • No application fee
Loan rates shown here are current as of:
May 2nd, 2022

APR = Annual Percentage Rate

Payment Example for a 5/5 Adjustable Rate Mortgage (ARM): For example, on an ARM loan for $350,000 at 3.282% APR, you would make 60 fixed payments of $1,526.86*, then 300 payments at the indexed rate of 3.250% to 9.250%, which might vary. *Payment does not include taxes and insurance.

Term Interest Rate Points APR
5/5 Adjustable Rate 3.250% – 4.500% 0.25% 3.282% – 4.534%

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. 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 and the Lifetime Cap limits the interest rate increase over the life of the loan.

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

Here is an 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%.