Why Today’s Homebuyers Are Taking a Fresh Look at Adjustable-Rate Mortgages

Buying a home can feel especially challenging when interest rates are higher than you hoped. But waiting for the “perfect” rate may also mean putting important plans on hold.

The good news is that a traditional fixed-rate mortgage is not the only option. A 7/1 adjustable-rate mortgage, commonly called a 7/1 ARM, may offer qualified buyers a more manageable way to move forward while providing several years of payment stability.

Here are six reasons today’s homebuyers are taking a fresh look at ARMs.

1. You may be able to start with a lower rate

Qualified homebuyers may be eligible for an interest rate as low as 5.75% with a 6.055% APR through 1st University Credit Union’s 7/1 ARM.¹

A lower initial rate may help reduce your monthly principal and interest payment compared with some traditional fixed-rate options. That could make it easier to fit a home purchase into your current budget.

2. Your initial rate is fixed for seven years

The word “adjustable” can make an ARM sound as though the rate could change at any time. That is not how a 7/1 ARM works.

With this mortgage, the initial interest rate remains fixed for the first seven years. During that time, your principal and interest payment will not change because of an interest-rate adjustment.

That gives you seven years of predictability before the rate is eligible to adjust.

3. You may not have to put your plans on hold

No one can predict with certainty when mortgage rates will rise or fall. Waiting for the market to become “perfect” could mean delaying a move that otherwise makes sense for your life.

A lower initial rate may help some buyers purchase a home now instead of continuing to wait. The right decision depends on your finances, your plans and how long you expect to remain in the home.

4. You have options before the rate can adjust

A mortgage does not necessarily have to remain unchanged for the entire life of the loan.

Before the first possible adjustment, you may decide to:

• Refinance into another loan

• Sell the home

• Continue with the mortgage

No one can guarantee what rates or refinancing options will be available in the future, but a seven-year fixed period gives you time to evaluate what makes sense as your circumstances change.

5. Rate adjustments are limited

After the initial seven-year period, the rate may adjust once each year. However, it cannot increase without limits.

Our 7/1 ARM includes adjustment caps¹ that limit how much the rate can change at the first adjustment and over the life of the loan.

These protections help make possible future adjustments more predictable and easier to understand.

6. There is no balloon payment

At the end of the seven-year fixed period, the remaining loan balance does not suddenly become due.

The mortgage continues according to its scheduled term. The interest rate may adjust annually after the initial fixed period, subject to the loan’s adjustment limits¹, but there is no large balloon payment waiting at the end of year seven.

Is a 7/1 ARM right for you?

A 7/1 ARM may be especially worth exploring if you recognize yourself in these situations:

• You’re ready to buy your first home or your next home, but today’s rates are making the monthly payment feel just out of reach. A lower initial rate may help make homeownership more comfortable.

• You understand that life may look different several years from now. During the seven-year fixed period, your family, career, finances or housing needs may change, and you may decide to sell before the first adjustment.

• You’re comfortable considering a refinance if mortgage rates fall. Should lower rates become available before the first adjustment, you would be open to refinancing into a mortgage that offers a better long-term fit. Our Mortgage Confidence Advantage may even help with the cost of refinancing.²

A traditional fixed-rate mortgage may still be the better choice if long-term payment certainty is your highest priority or if a future increase would place too much strain on your budget.

The important thing is not to choose a mortgage based on fear, habit or headlines. It is to understand how each option fits the life you are building.

Let’s talk about your goals

Life cannot always wait for perfect timing or perfect circumstances. Our mortgage team is here to help you understand your options, compare potential costs and decide whether a 7/1 ARM or another mortgage solution may be right for you.

There is no pressure and no obligation. Just a straightforward conversation about where you are, where you want to go and what may help you get there.

Call or text Mortgage Services at 254.752.2797.

1st University Credit Union. Helping You Do Life.

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1: 5.75% interest rate; 6.055% APR. Rate and APR are accurate as of 08/03/2026 and are subject to change without notice. Advertised rate applies to a 7/1 adjustable-rate mortgage and is fixed for the first seven years. After the initial fixed-rate period, the interest rate and monthly payment may increase or decrease annually based on the applicable index and margin, subject to adjustment caps of 2% at the first adjustment, 2% at each subsequent annual adjustment and 5% over the life of the loan. No balloon payment. Offer available to qualified borrowers and subject to credit approval, property eligibility, loan-to-value requirements and other underwriting criteria. Membership required and can be established during loan processing. Additional terms and conditions may apply. Contact 1st University Credit Union for complete loan details. NMLS #753866. Federally insured by NCUA. Equal Housing Opportunity.

2: Finance your home purchase with 1st University Credit Union and, if you refinance that mortgage with us within three years, we’ll contribute up to $1,500 toward eligible closing costs. One credit per property. Additional terms and conditions apply.