Start lower. Stay flexible.
An adjustable-rate mortgage — or ARM — gives you a lower interest rate upfront in exchange for a rate that can change over time. It starts with a fixed period where your rate stays the same, then adjusts periodically based on market conditions. For buyers who plan to sell, move, or refinance within a few years, an ARM can mean significant savings compared to a traditional fixed-rate loan. It's all about matching your mortgage to your plans.
How an ARM works
ARMs are often described by two numbers — like a 5/1 ARM. Here's what that actually means.
Phase 1: The fixed period
Your rate is locked in and doesn't move. Depending on your loan, this lasts 5, 7, or 10 years.
Phase 2: The adjustment period
After the fixed period ends, your rate adjusts once per year based on a market index, within set limits called caps.
Built-in Protection: Rate caps
Your rate can only move so much at each adjustment and over the life of the loan — so there are no shocking jumps.
Why buyers choose an ARM
Our fixed-rate mortgages come in a two term lengths, 15 and 30-year. The right one depends on your monthly budget and how quickly you want to own your home outright.
Lower starting rate
ARM rates are typically lower than fixed rates upfront, which means lower payments in the early years.
More buying power
A lower initial payment may help you qualify for a larger loan amount than you'd get with a fixed rate.
Save if you move soon
If you sell or refinance before the fixed period ends, you keep the savings without ever facing an adjustment.
Caps keep you protected
Built-in rate caps limit how much your rate can change at each adjustment and over the life of the loan.
Think an ARM might be right for you?
Let's find out together.
Our online mortgage application is fast and simple. Answer a few questions, and we can show you the rates and loan options you qualify for.
Questions? Contact our mortgage team at 405-685-6200 x660, or mortgage@usecreditunion.org
what does a 5/1 arm actually mean?
The two numbers describe how your loan behaves over time. The first number — 5 — is how many years your interest rate stays fixed and doesn't change. The second number — 1 — is how often (in years) your rate adjusts after that fixed period ends. So a 5/1 ARM gives you 5 years of a stable rate, then adjusts once per year after that. A 7/1 ARM is fixed for 7 years, then adjusts annually, and so on.
How much can my rate change after the fixed period?
ARM loans come with built-in rate caps that limit how much your rate can move. There are typically three caps to know: the initial cap (how much the rate can change at the first adjustment), the periodic cap (how much it can change at each subsequent adjustment), and the lifetime cap (the maximum it can ever increase over the life of the loan). These caps are spelled out clearly in your loan terms.
Is an ARM riskier than a fixed-rate mortgage?
It depends on your situation. An ARM carries more uncertainty than a fixed-rate loan because your payment can increase after the fixed period. But for buyers with a clear plan — like selling or refinancing before the rate adjusts — that uncertainty may never come into play. The key is going in with a plan and understanding your rate caps so you know what you're comfortable with.
Can i refinance out of an arm into a fixed-rate mortgage later?
Yes, absolutely. Refinancing from an ARM into a fixed-rate mortgage is one of the most common reasons people refinance. If your plans change and you decide to stay in the home longer than expected — or if fixed rates drop to an attractive level — refinancing gives you the stability of a locked rate going forward. Our loan advisors can help you evaluate whether refinancing makes sense when the time comes.