Could Your Mortgage Rate Start with a 5?
A lower initial mortgage rate may help you move forward with more confidence.
If you’ve been waiting for mortgage rates to come down before buying a home, 1st University Credit Union has an option worth considering.
For a limited time, qualified homebuyers may be eligible for a mortgage rate as low as 5.75% with a 6.055% APR1 through our 7/1 Adjustable-Rate Mortgage.
With this option, your initial rate is fixed for seven full years, giving you a lower initial rate and payment along with years of predictability.
Patti Parker | VP, Mortgage Services | NMLS #1334842
Call or text: (214) 284-4800 | Office: (254) 752-2797 ext. 322
What is a 7/1 Adjustable-Rate Mortgage?
A 7/1 Adjustable-Rate Mortgage, often called a 7/1 ARM, is a mortgage with an initial rate that stays fixed for the first seven years.
After that, the rate can adjust once per year, subject to rate caps that limit how much it can increase.
What you need to know
- Your interest rate is fixed for the first seven years.
- After seven years, the rate can adjust once per year.
- The first adjustment is limited to 2 percentage points.
- Each later annual adjustment is also limited to 2 percentage points.
- Over the life of the loan, the rate can never increase by more than 5 percentage points above the original rate.
- There is never a balloon payment. You’ll continue making regular monthly payments until the mortgage is paid off.
For Homebuyers: Stop Waiting for the “Perfect” Rate
Buying a home is a big decision, and it makes sense to pay attention to mortgage rates. But waiting for the perfect rate can also mean putting your plans on hold longer than you want.
A 7/1 ARM may help you move forward now with a lower initial rate and payment, especially if you expect to move or refinance before the rate begins adjusting.
Could a 7/1 ARM fit your homebuying plans?
A 7/1 ARM has a fixed rate for the first seven years before it can begin adjusting annually. If you expect to sell or refinance within that period, you may benefit from the lower initial rate without experiencing an adjustment.
A 7/1 ARM may offer a lower initial rate and payment than a fixed-rate mortgage, which could provide more room in your monthly budget or increase your current buying power. Be sure to weigh those potential savings against the possibility of higher payments later.
Consider whether your income and budget could comfortably absorb a higher mortgage payment if the rate adjusts after the first seven years.
Refinancing could provide another option before the adjustable period begins, but future rates and refinancing eligibility are never guaranteed. With our Mortgage Advantage, you may receive a $1,500 lender credit toward closing costs if you refinance the same mortgage with us within three years.
Mortgage Advantage: More Confidence for Whatever Comes Next
With our Mortgage Advantage, if rates come down and you refinance that same mortgage with 1st University Credit Union within three years, you may receive a $1,500 lender credit toward closing costs.2
That means you can consider the rate available today while keeping another option open if rates improve later.
Already Have a Mortgage Somewhere Else?
If your current mortgage is with another financial institution, this may be a good time to take another look.
For a limited time, qualified homeowners may be eligible to refinance with 1st University Credit Union using our 7/1 Adjustable-Rate Mortgage special.
Refinancing may help you lower your initial rate, reduce your monthly payment, or bring your mortgage home to a local team that knows you.
Could refinancing with a 7/1 ARM fit your plans?
A 7/1 ARM has a fixed rate for the first seven years before it can begin adjusting annually. If you expect to sell your home within that period, you may benefit from a lower rate without ever experiencing an adjustment.
Refinancing into a 7/1 ARM may lower your initial rate and monthly payment, creating more room in your budget. Be sure to weigh those potential savings against the possibility of higher payments later.
Consider whether your income and budget could comfortably absorb a higher mortgage payment if the rate adjusts after the first seven years.
Refinancing could provide another option before the adjustable period begins, but future rates and refinancing eligibility are never guaranteed. With our Mortgage Advantage, you may receive a $1,500 lender credit toward closing costs if you refinance the same mortgage with us within three years.
Who Can Apply?
1st University Credit Union serves people who live, work, worship, or attend school in McLennan, Bosque, or Erath County. Baylor alumni and members of Baylor’s Alumni by Choice program are also eligible for membership, along with eligible family members.
Not sure whether you qualify? Patti can help you confirm membership eligibility.
Let’s Run the Numbers
A 7/1 ARM can be a smart option if you value a lower initial payment and expect to move or refinance before the rate begins adjusting. Patti Parker, VP of Mortgage Services, can help you see how it could fit your plans, budget, and homebuying goals.
Talk with Patti today and see what a lower initial rate could make possible.
Frequently Asked Questions
Is the rate fixed for the first seven years?
Yes. With our 7/1 Adjustable-Rate Mortgage, your interest rate is fixed for the first seven years.
What happens after seven years?
After the first seven years, the rate can adjust once per year. The first adjustment is limited to 2 percentage points. Each later annual adjustment is also limited to 2 percentage points.
Can the rate increase without limit?
No. The lifetime cap is 5 percentage points above your original rate.
Is there a balloon payment?
No. There is never a balloon payment. You’ll continue making regular monthly payments until the mortgage is paid off.
Is a 7/1 ARM better than a fixed-rate mortgage?
It depends on your goals, budget, and timeline. A 7/1 ARM may be worth considering if you want a lower initial payment and expect to move or refinance before the rate begins adjusting. If long-term payment certainty is more important, a fixed-rate mortgage may be the better fit.
Can I refinance later if rates come down?
Yes, you may be able to refinance later if rates come down, but future rates and refinancing eligibility are not guaranteed. With Mortgage Advantage, you may receive a $1,500 lender credit toward closing costs if you refinance the same mortgage with 1st University Credit Union within three years.
Can this mortgage be used for a refinance?
Yes. The 7/1 ARM special may be available for both home purchases and refinances, subject to eligibility and credit approval.
15.75% interest rate with a 6.055% Annual Percentage Rate (APR) is based on a 7/1 Adjustable-Rate Mortgage with a 30-year term. Rate may increase after consummation. Based on a purchase-money loan at 80% loan-to-value and excellent credit. Rates, terms, and conditions are subject to change and credit approval.
2Mortgage Advantage eligibility and lender-credit requirements apply. Offer available to members who close an eligible mortgage with 1st University Credit Union on or after January 1, 2025. If you refinance that same mortgage with 1st University Credit Union within three years of the original closing date, you may qualify for a $1,500 lender credit toward eligible closing costs. The offer applies to both rate-and-term and cash-out refinances. Limit one lender credit per eligible mortgage. The credit has no cash value, cannot exceed eligible closing costs, and will be applied at the refinance closing. This limited-time offer is subject to eligibility requirements, credit approval, and other terms and conditions. 1st University Credit Union may modify or discontinue the offer at any time without prior notice.
Have Questions? Contact Patti.
Patti Parker
VP, Mortgage Services
NMLS #1334842
Call or text: (214) 284-4800
Office: (254) 752-2797 ext. 322
Texas Mortgage Complaint Notice
TEXAS RESIDENTS: CONSUMERS WISHING TO FILE A COMPLAINT AGAINST A MORTGAGE BANKER OR RESIDENTIAL MORTGAGE LOAN ORIGINATOR LICENSED IN TEXAS SHOULD SEND A COMPLETED COMPLAINT FORM TO THE DEPARTMENT OF SAVINGS AND MORTGAGE LENDING (SML): 2601 N. LAMAR BLVD., SUITE 201, AUSTIN, TEXAS 78705; TEL: 1-877-276-5550. INFORMATION AND FORMS ARE AVAILABLE ON SML'S WEBSITE: SML.TEXAS.GOV.