Adjustable-Rate Mortgage Loans
Get a lower rate and payment to kickstart your home loan.
An adjustable-rate mortgage (ARM) is a valuable tool in a range of unique situations. You get a fixed rate for the first period of your loan so it’s a great option if you don’t plan to stay in your home long term or if market rates are high when you buy.
Benefits of Legacy Adjustable-Rate Mortgage Loans:
Competitive Fixed Rate for 5 Years
Get a lower initial rate and payment than for a comparable fixed-rate mortgage.
Borrow up to 95% of the Home Value
Down payments start at 5% and you’ll pay no PMI if your down payment is over 20%.
Pay No Loan Origination Fee
Save thousands of dollars when we waive your origination fee so you have more cash to spend.
Ideal for Short-Term Ownership
ARMs are good if you plan to move or sell soon, or if you think market rates will drop in the future.
Make an Adjustable-Rate Mortgage Loan Work for You
An ARM offers a lower rate and monthly payment for the first five years of your home loan, so you have plenty of time to get ready for when your rate starts adjusting up or – hopefully – down.
- A 5/1 ARM means your rate is fixed for five years and then adjusts each year.
- We’ll help you get the best annual percentage rate (APR) possible for your fixed period.
- If market rates come down in five years, you’ll get a lower rate without a costly refinance.
- Down payments start at 5%, so you can finance up to 95% of your home’s value.
- Private mortgage insurance (PMI) is needed on down payments under 20%.
- You need a minimum credit score of 720 and a debt-to-income (DTI) ratio under 43%.
- ARMs are available for purchase or refinance.
- There’s no origination fee.
A Legacy ARM offers our lowest rates today and sets you up to automatically get lower rates in the future when market rates come down.
Legacy Credit Union Adjustable-Rate Mortgage Loan Rates
|Adjustable-Rate Mortgage***||5/1 ARM||6.00%%||6.367%%|
Our Simple Application Process for an Adjustable-Rate Mortgage Loan
Enter your details into our secure online portal and we’ll let you know if you’re eligible for an ARM.
We’ll discuss your terms and likely rate so you can take the next steps with confidence.
Go House Hunting!
With your financing secured, your Realtor can help you negotiate a good deal with a seller.
“Great service and friendly people.”
– Jerome J., Birmingham, Alabama
FAQs About Adjustable-Rate Mortgage Loans
An adjustable-rate mortgage (ARM) loan is simpler than it sounds. Here’s what you need to know:
- You get a fixed interest rate and annual percentage rate (APR) for the initial period of your loan. For example, a 5/1 ARM means your rate is fixed for five years.
- At the end of the fixed period, your rate starts adjusting with the markets. With a 5/1 ARM, it will adjust each year. A 5/5 ARM means it would adjust every five years.
- When your rate starts adjusting, it may go up or down and your monthly payment will also go up or down.
- There are caps on how much your rate can adjust the first time, each time after that, and in total over the life of your loan.
- The total loan term is usually 30 years.
There are several reasons why you might choose an ARM:
- The fixed rate you get for the first period of your loan may be lower than what is available with a comparable fixed-rate mortgage.
- If market rates are high when you buy, then rates may come down in the future and you’ll be able to get a lower rate without a mortgage refinance.
- If you plan to move or sell in the short term, then you don’t need to consider what will happen when your rate adjusts – you can simply budget around your fixed rate for your initial period.
Here are the guidelines you likely need to meet to qualify for an ARM:
- Credit score of 720 or above
- Debt-to-income (DTI) ratio below 43%
- Down payment of at least 5% of your home value
- Private mortgage insurance (PMI) if your down payment is under 20%
You need to pay PMI if your loan-to-value (LTV) ratio is over 80%. This generally means your down payment is under 20%. If your LTV is over 80%, you may be able to cancel your PMI when you achieve 20% equity in your home.
These are ratios that your lender may use to determine how much you can borrow and what your rate might be.
- LTV is the loan-to-value ratio, which measures how much you’re borrowing compared to the appraised value of the property you’re buying. If your LTV is 80%, you made a down payment of 20%.
- DTI is the debt-to-income ratio, or how much total debt you have compared to your total income. Lenders want you to have a DTI under 43%, but some loan programs may allow for higher ratios.
- PMI is private mortgage insurance, which is a premium you pay to protect your private lender in case you default on your loan. It doesn’t protect you or your home.
You will need to pay closing costs on your adjustable-rate mortgage loan. You can pay upfront, or some or all of the costs may be rolled into your principal or included in your APR.
Legacy is here to make the home-buying process easier, and we’ll make sure you fully understand your closing costs before you finalize your loan. Costs may include:
- We will waive our loan origination fee on your ARM loan.
- Underwriting and processing fees. These are charges for checking all your financial information and documents.
- Title search and title registration fee. This checks there are no existing liens on your property, so you don’t get landed with debt later.
- Inspection fees. It’s a good idea to have your home inspected to check for any issues.
- Appraisal fees. An appraisal checks if the current market value of your home matches the selling price.
- Property taxes. You may need to pay some taxes in advance, and they may be held in an escrow account.
More Home Loan Options
Build your dream home in Alabama with flexible terms and competitive rates.
First Time Home Buyer Alabama
Make the home buying process easier and choose a home loan that matches your budget.
*The interest rate, annual percentage rate (APR), origination fees, discount points and closing costs are subject to change without notice.
**Your APR will vary based on your final loan amount, credit history, loan to value, margin, and finance charges.
***5/1 Adjustable Rate (ARM). Up to 95% LTV. No Origination Fee. PMI on LTVs greater than 80%. Requires 720 minimum credit score and debt to income not to exceed 43%. Rates are subject to change without notice.