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Adjustable Rate Mortgages

Up your buying power with an adjustable rate mortgage

In a real estate market where home prices are as high as ever, most people can use all the help they can get to purchase a home. An Adjustable-Rate Mortgage could provide the ARM strength you need to open the door to the home you really want. ARMs can also be a great tool for buyers who plan to stay in a home for just a handful of years.


What is an adjustable-rate mortgage?

An adjustable-rate mortgage (ARM) is a loan where the interest rate changes periodically, usually once a year. ARMs include an initial fixed-rate period that is typically 3 to 10 years. After the fixed-rate period is over, the interest rate changes (adjusts) periodically.

See rates
 

Here's an example

Let's say you've found that perfect California house and you choose to finance it using a 7/1 ARM for a 30-year term. This means your interest rate will be fixed for the first 7 years, then the rate could move up or down one time per year. "7/1" means seven years at a fixed rate, then the rate can adjust once a year for the rest of the loan term.
 

SMCU ARM options

We offer a variety of adjustable-rate mortgages for conforming loans, high-balance loans, and jumbo loans up to $3.5 million.

Compare SMCU Adjustable-Rate Mortgages:
 

3/1, 7/1 and 10/1 ARMs

Adjustable rate loan with an initial fixed rate period of 3, 7, or 10 years with payments amortized over 30 years

  • Interest rate adjusts annually following the initial fixed-rate period
  • Index is based on weekly average yield of one-year Treasury Constant Maturity (TCM)
  • Margin-Conforming 2.5%, over conforming 2.5%, and over $1,000,000 2.5%
  • 2% annual rate increase cap with a 5% increase cap for the life of the loan

5/5 ARMs

  • Adjustable rate with an initial fixed rate prior of 5 years, with payments amortized over 30 years
  • Interest rate adjustment every 5 years starting the year following the initial fixed rate period
  • Index is based on weekly average yield of 5-year Treasure Constant Maturity (TCM)
  • Margin-Conforming 2.5%, over conforming 2.5%, and over $1,000,000 2.5%
  • 2% annual rate increase cap with a 5% increase cap for the life of the loan

Benefits and considerations

  • Better short-term rates: ARMs usually have lower interest rates and APRs during the initial , fixed-rate period.
  • Lower monthly payments: ARMs let you keep your monthly payments lower during the initial term of your home loan.
  • Afford more house: because the initial rate on an ARM is usually lower than a fixed-rate loan you may be able to purchase a slightly more expensive home.
An ARM could be the right financing option for you, particularly if you plan to stay in your home for 10 years or less. But don't worry, you don't have to make this decision alone. Our mortgage team is here to help.


Get in touch with an SMCU California mortgage expert

Call Email apply
(650) 363-1799 reloanofficers@smcu.org Get Preapproved Online
All mortgage loans through San Mateo Credit Union are for homes in California only. Adequate property insurance required for the life of the loan. Flood insurance may be required. All loans are subject to credit approval. Please speak with a Real Estate Representative for current rates and information on loan limits as additional conditions and restrictions may apply. San Mateo Credit Union NMLS #416747.
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