A lower ARM Rate could open the door to home ownership
For some, an Adjustable Rate Mortgage (ARM) can be a viable option in today’s economic situation. If you’re ready for home ownership but want to start with a lower interest rate and, therefore, a lower monthly payment, an ARM from TEGFCU may be a way to maximize your buying power.
This loan is great for members who want their specific situations to be considered. For example, if you own a home and want to refinance your loan, knowing you’ll be transferred in 5 years, a 5/6 ARM loan might be a great option. You’ll pay lower for the first 5 years of a 5/6 ARM loan than if you refinance with a fixed-rate loan.
ARMs can be complex, so it is a good idea to work closely with a mortgage specialist to understand all the terms and conditions that can impact your payment now and in the future.
What is an ARM?
Adjustable-rate mortgages (ARMs) are home loans where the interest rate could change over time. It starts with a fixed interest rate for the first 5-10 years that converts to a variable rate when the initial term is up.
TEG’s ARM rate is determined by the Secured Overnight Financing Rate (SOFR) index rate and adjusts up or down depending on market conditions after the fixed-rate term ends. Unlike a fixed-rate mortgage, the interest rate and your payments may change over the life of the loan. When interest rates go up, your monthly mortgage payment may increase, but when interest rates go down, your monthly mortgage payments may decrease. The risk of higher interest when rates adjust is a crucial factor for a borrower considering an adjustable-rate mortgage.
An adjustable-rate mortgage consists of two
numbers when advertised (i.e. 10/6 ARM):
An adjustable-rate mortgage is best
for those who:
Adjustable-Rate Mortgage (ARM) Rates
| Mortgage Type | Rate | APR* | Points | First Cap | Subsequent Cap | Lifetime Cap |
|---|---|---|---|---|---|---|
| 5/6 SOFR ARM | 5.750% | 7.006% | 0.875% | +/- 2.00% | +/- 1.00% | +/- 5.00% |
| 10/6 SOFR ARM | 6.000% | 6.683% | 0.875% | +/- 5.00% | +/- 1.00% | +/- 5.00% |
APR = Annual Percentage Rate. Rates effective as of 06/26/2024. All loans are subject to approval. APR assumes a $300,000 loan amount with a FICO score of 760 or higher for a loan for an owner-occupied (primary residence), single-family dwelling in New York State with a loan-to-value ratio of 75% or less. Rates on 5/6 ARMs are fixed for the first five years and subsequently subject to change bi-annually. Rates on 10/6 ARMS are fixed for the first ten years and subsequently subject to change bi-annually.
For example, a 5/6 ARM at a fixed initial interest APR of 6.994% would initially be $1,750.72 or a 10/6 ARM at a fixed initial interest APR of 6.672%, would initially be $1,798.65, with each loan adjusting every six months after the initial term based on an index and margin. Real estate taxes, insurance, and private mortgage insurance (if applicable) are not included; therefore, the actual payment obligation will be greater. After the initial fixed term, rates will adjust based on the index, Secured Overnight Financing Rate (SOFR), and a margin. Your rate may vary based on your creditworthiness, loan amount, purpose, LTV, lock period, and other credit characteristics.
All rates and terms are subject to change without notice. No rate is guaranteed without a valid rate lock. A point is equal to 1% of the loan amount’s balance. Private mortgage insurance (PMI) is required on mortgages that exceed 80% loan-to-value (LTV). Contact a TEG Mortgage Officer for further details. Other terms and conditions may apply.
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Meet Our Mortgage Experts
Jeffrey Shields
Mortgage Officer
NMLS# 1466211
Matthew Bannan
SENIOR MORTGAGE OFFICER
NMLS# 404022
Darren Dibenedetto
Senior Mortgage Officer
NMLS# 404038
Scott McNally
Mortgage Officer
NMLS# 1841508
Jessica Schoen
Senior Mortgage Officer
NMLS# 22486
Kevin Arduino
Mortgage Officer
NMLS# 2514289Homebuying Questions?
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Apply for a TEGFCU Mortgage
To apply for a mortgage, you must either be a current member or become a member before closing. Membership is open to anyone (and their immediate families) who lives, works, worships, or attends school in Dutchess, Orange, Ulster, Putnam, Rockland, Sullivan, and Westchester County, NY with an initial $5 deposit, as well as Members of the Dutchess County SPCA or Child Care Council of Dutchess and Putnam Inc which are headquartered in our field of membership. Also, if you are purchasing a primary residence in one of these counties you are eligible for membership.
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