A popular program for borrowers who plan to keep the loan less than seven years, the 7/1 ARM is a loan with a fixed rate and payment for the first seven years and then turns into an adjustable rate mortgage for the remaining 23 years of the loan. The primary advantage of the 7/1 ARM is a lower initial rate and payment than available on a 30 year fixed rate mortgage, or the 10/1 ARM.
The interest rate and payment is fixed for the first 84 months of the loan’s 30 year term. At the end of the 84 months, the interest rate adjusts to the lower of:
1. The Secured Overnight Financing Rate (SOFR) plus 3.00%, or
2. The initial start rate plus 5%.
Thereafter, the interest rate will adjust every 6 months to the lower of:
1. The Secured Overnight Financing Rate (SOFR) plus 3.00%,
2. The previous rate plus 1%, or
3. The initial start rate plus 5%.
We offer the 3 main adjustable rate mortgage program options, with the fixed rate portion of the loan ranging from 5 years to 10 years. Visit our specific ARM rate program pages to see how each can benefit you!