Credit Union of America has introduced a 5/1 ARM just in time to help members dodge the current rising rate environment. ARM is an abbreviation for Adjustable-Rate Mortgage. Don’t let the term adjustable scare you. The 5/1 indicates when the rate is adjusted. For CUA’s loan, the introductory rate is fixed for the first five years, this is the 5. It then moves to a variable, or adjustable rate, where the rate can adjust once annually (1) for the remaining life of the loan. For your protection there are caps on how much the rate can increase at the time of the first adjustment, how much the rate can go up over the entire term of the loan, and how often it can be adjusted. This is valuable during a rising rate environment like we have now. CUA also offers a 7/1 ARM, where your rate is fixed for the first seven years. If you prefer payment predictability, you’ll want to consider a traditional fixed-rate mortgage.
And ARM is great if you plan to sell in less than six to seven years because you have a lower than market rate fixed for the initial five-year period. But it can also be beneficial for longer stints in your home by allowing you to lock the rate in for the first five years and then move to a potentially lower fixed-rate mortgage. The ARM introductory rate is most often less than a traditional fixed-rate mortgage.
Here are the basic features of CUA’s 5/1 Adjustable-Rate Mortgage:
- Term 30 years
- Minimum 3% down payment
- Minimum loan is $100,000 and maximum is $1.5 million
- Finance up to 97% of the purchase price or appraised value, whichever is less
- CUA’s initial rate for the first 5 years, as of 5.23.22, is 5.216% APR
- Available for purchase or refinance
- Adjusts annually starting year six, 2% maximum per adjustment
- Maximum adjustment over the life of the loan is the initial rate plus 4.00%
- Origination fee is 1% of principal
- Purchase/Refinance 5/1 ARM mortgage has an adjustable rate, with a 30-year repayment. Annual percentage rate (APR) as of 05/23/2022 is 5.216% and subject to change. Example: $250,000 loan at 4.125% interest rate equals $1,211.62 monthly payment. Taxes, insurance, and mortgage insurance are not included; actual payments may be greater. 15-year, 20-year, and 30-year fixed-rate products available. Minimum loan amount of $100,000 and maximum loan amount of $1,500,000. Minimum FICO® score of 680 required for financing. Property types allowed include single-family residences and owner-occupied only. No second homes or rentals. Mandatory escrow for all loans over 80% LTV.
If you have questions about CUA mortgage loans, please contact 316.265.3272, ext. 10032 or 800.256.8049.
If you’re ready to apply for a mortgage loan, it’s easy and our application is available 24/7. Gather your personal information first and then it’s about a 20-minute process to complete the application, at your convenience.
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