Know the strengths of an ARM

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If you’re not ready for your forever home or have a shorter payback period in mind, an Adjustable Rate Mortgage (ARM) might be right for you. Specifically, here’s when an ARM works best.

• If you plan to sell the property or relocate within 10 years
• If you expect to pay the loan off early

When rates fluctuate

ARMs tend to start out with lower rates than fixed rate mortgages for a set period of time. Proponent Federal Credit Union has ARMs based on a full term of 30 years, and the lower initial rate can be for 1, 3, 5, 7, or 10 years. Once the initial period ends, the loan will adjust annually based on the terms of the initial loan agreement.

Time your ARM right

When choosing an ARM, the key is to make sure that the initial rate on your adjustable loan aligns with your future plans. For example, if you expect to be in the loan for 6 or 7 years, you should consider a 7/1 or 10 /1 ARM instead of a 3/1 year ARM.

Proponent’s team can help you get an idea of how potential rate and payment changes might be calculated and the limits to those changes. We can also help estimate the potential impact on future payments and affordability just in case plans change.

For a limited time, new members can get $500 off of our already low closing costs.† Simply use the promotional code NUT22 when applying online.

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