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Adjustable-Rate Mortgages

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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 and loan payments could change over time. The initial interest rate is fixed for a set period of time, typically 3-10 years, after which the interest rate my adjust periodically based on market changes to the index plus a margin. The margin remains constant throughout the life of your loan. Interest rate changes are further limited by loan caps which limit the amount your rate can increase or decrease at the first and subsequent rate changes, as well as over the life of your loan. When the interest rate changes, your payment will change so the remaining balance will amortize over the remaining term of your loan.

TEG offers ARMs with an initial fixed term of 5 or 7 years, after which your rate may change every six months (bi-annually). At adjustment, the new rate is determined by the Secured Overnight Financing Rate (SOFR) index plus a fixed margin of 2.25% with maximum periodic rate changes limited by the loan caps. When interest rates go up, your monthly mortgage payment may increase, but when interest rates go down, your monthly mortgage payments may decrease. Th risk of higher interest when rates adjust is a crucial factor for a borrower considering an Adjustable-Rate Mortgage.

The first number is the interval at which rates are adjusted after the initial period, in this case, 7 years.

The second number is how often the rate adjusts after the fixed period, in this case, every six months.

Want to maximize their current buying power

Keep your monthly payments lower during the first few years of your loan

Plan to purchase a new home or refinance within the fixed term of the loan (5 to 7 years)

Expect interest will be lower in the coming years

Adjustable-Rate Mortgage (ARM) Rates

Mortgage TypeRateAPRPointsFirst CapSubsequent CapLifetime Cap
5/6 SOFR ARM5.750%6.860%0.875%+/- 2.00%+/- 1.00%+/- 5.00%
7/6 SOFR ARM6.000%6.797%0.875%+/- 5.00%+/- 1.00%+/- 5.00%

APR = Annual Percentage Rate. Rates effective as of 10/11/2024. 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 7/6 ARMS are fixed for the first seven years and subsequently subject to change bi-annually.

For example, a 5/6 ARM at a fixed initial interest APR of 6.860% would initially be $2,149.24 or a 7/6 ARM at a fixed initial interest APR of 6.797%, would initially be $1,798.65. 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, not to exceed the initial, subsequent or lifetime change cap. 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.


Know exactly what you qualify for!

Start searching for your new home, knowing the loan amount, interest rate, and monthly payment you could qualify for. Not only will you know what you can afford, but you’ll get a competitive edge since you’ll be able to make a solid offer when you find the right house.

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Why Trust TEGFCU with your Mortgage Financing?

We’re proud to be local, member-owned, and not-for-profit. We take our responsibility to our members seriously and strive to give you the best home financing experience possible.

Competitive Rates, Flexible Options – At TEGFCU, you’re sure to find a home loan that meets your needs at a great low rate that you can afford.

Low Closing Costs – Compare our closing cost to other lenders – we won’t surprise you with hidden closing costs.

Local Home Loan Experts – Our knowledgeable Hudson Valley Mortgage Officers can offer step-by-step guidance that you won’t always find at other institutions. Our commitment to service from pre-approval to closing sets us apart.

In-House Processing & Underwriting – We are dedicated to making a difference in the lives of our neighbors because we live here too. We make it easy to get the right mortgage and have the financial strength to make it happen.

Meet Our Mortgage Experts

Jessica Schoen headshot

Jessica Schoen

Senior Mortgage Officer

NMLS# 22486
Matt Bannan

Matthew Bannan

SENIOR MORTGAGE OFFICER

NMLS# 404022
Scott McNally headshot

Scott McNally

Mortgage Officer

NMLS# 1841508
Darren DiBenedetto

Darren Dibenedetto

Senior Mortgage Officer

NMLS# 404038
Jeffrey Shields headshot

Jeffrey Shields

Mortgage Officer

NMLS# 1466211

Find helpful articles, tools, and other great resources to help you with your homebuying journey.

New homeowners

Adjustable-Rate Mortgage FAQs

How often will my mortgage rate change?

The interest rate on Adjustable-Rate Mortgages changes once per year.

What will my mortgage payments look like?

Calculate your preliminary monthly mortgage payment using our ARM mortgage rate calculator

Note that these numbers are only predictions and may not necessarily reflect your final monthly costs.

Can I lock in my mortgage interest rate?

Yes! And we encourage it. Contact your loan officer as soon as possible to lock in your desired interest rate.

Have additional questions? See our full list of Mortgage FAQs here.

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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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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.

The Homebuyer Dream Program® (HDP®) is a registered trademark of the Federal Home Loan Bank of New York (FHLBNY). The grant is a Federal Home Loan Bank of NY program and funding is subject to their approval. See credit union for additional program details.

We Do Business in Accordance with Federal Fair Lending Laws – Fair Housing Poster.

Home Mortgage Disclosure Act Notice – The HMDA data about our residential mortgage lending are available for review. The data show: Geographic distribution of loans and applications Ethnicity, race, sex, and income of applicants and borrowers Information about loan approvals and denials. HMDA data for many other financial institutions are also available online. For more information, visit the Consumer Financial Protection Bureau’s website.

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