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Adjustable Rate Mortgages

Tailor-made to fit your needs, a fixed period adjustable rate mortgage (ARM) combines the best features of a fixed rate and an adjustable rate mortgage.

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About ARMs

Metuchen Savings Bank's standard fixed period ARMs are tied to the one year Treasury securities index and offer a stable rate for the first three, five, seven, or ten years. At the end of the fixed period, the interest rate will adjust annually. Initial rate caps and subsequent annual adjustments are capped at 2 percent with a lifetime cap of 5 percent. Our mortgages have a desirable convertible feature that allows you the option to convert to a fixed rate mortgage (FRM) after the initial fixed period. Lower rate alternative to 30 year fixed rate.

  • Interest rate cap protection against rapid interest rate increases.
  • Extended initial fixed interest periods of three to ten years before the initial interest rate change.10 & 15 Year Fixed Rate Mortgage
  • Lower rates: Offer borrowers a lower initial rate than with a 30 year FRM and 30 year Fixed period. ARMs offer less risk to borrowers who want a competitive note rate with maximum interest rate protection. And, unlike the 7 Year Balloon, there is no call risk for any of the amortization. Lower rates mean easier loan qualification for more potential homeowners.
  • Less risk: Fixed period ARMs.
  • Ample time before the first interest rate adjustment: Fixed period ARMs are a good fit for borrowers who expect to receive salary increases or accumulate assets before the interest rate adjusts at the end of the fixed period.
  • Limited payment shock: Fixed period ARMs feature limitations on the upward and downward movement on the interest rate at the initial adjustment, subsequent adjustments and a maximum interest rate over the life of the loan. In rapidly increasing rate environments, initial, periodic and lifetime caps can protect a borrower from payment shock - the inability to meet the mortgage payment, based on the adjusted interest rate.

5/1, 7/1, 10/1 Adjustable Rate Mortgage

Fixed period adjustable rate mortgages have an initial fixed rate period, after which the rate may adjust either upwards or downwards annually, based on the cap structure and the index chosen.

Consumer Benefits

  • Interest savings in the short run compared to comparable fixed rate loans.
  • Terms and features to suit almost any borrower's needs.
  • Qualify for higher loan amounts with lower interest rates than comparable fixed rate loans.

Property Types

  • Single family detached
  • Single family attached
  • Condos
  • PUDs

 

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