FDIC-Insured - Backed by the full faith and credit of the U.S. Government

Skip to Content
Personal
Business

Adjustable-Rate Mortgages (ARMs)

Turn your homebuying dreams into a reality with a FirstBank mortgage. With both Fixed Rate and Adjustable Rate mortgage options, we can help determine which would work best for you.

Questions?

Give us a call

1-800-964-3444

Call

Find a Location

Visit your local FirstBank branch to speak with a loan officer.

Locations

Let us know how we can help.

Provide some basic information, and one of our Loan Specialists will be in touch within one business day.

How Do Adjustable-Rate Mortgages Work?

ARMs are long-term home loans with two different interest rate periods; a fixed-rate period where the initial interest rate will not change and an adjustable-rate period where the interest rate will change annually after the initial fixed period of time.

Fixed-Rate Period

During the initial fixed-rate period, your interest rate won't change. The initial fixed-rate period is typically the first five or seven years of the loan.

Adjustable-Rate Period

After the fixed-rate period, your interest rate can adjust, up or down, based on a fixed margin plus the disclosed index rate at the time of the adjustment. For FirstBank loans, the rate is adjusted annually, and you will receive notices informing you of the new rate and the effective date.

What are the Advantages of an Adjustable-Rate Mortgage?

  • ARMs typically have a lower rate than a Fixed-Interest Rate Mortgage, potentially allowing you to expand your options and budget when searching for a new home.
  • A lower interest rate in the initial fixed-rate period and, subsequently, a lower monthly mortgage payment, could allow you to save more each month for other needs like college or retirement.
  • There is no pre-payment penalty associated with Adjustable-Rate Mortgages, so you may have the opportunity to refinance or sell your home before the initial fixed-rate period ends.

What are the Disadvantages of an Adjustable-Rate Mortgage?

  • Your interest rate may increase after the initial fixed-rate period ends, resulting in a higher monthly mortgage payment.
  • If rates shift upward, you may not have room in your budget to afford the higher monthly payments.

Refinancing an ARM with FirstBank

An ARM can be the right fit for many situations, but what if your financial circumstances change? You can apply to refinance to a fixed-rate mortgage or another ARM.

Mortgage Refinance Benefits:

  • Cash-out capability - you may be eligible to access a portion of your home's equity for home improvements, debt consolidation, or other needs.
  • Lengthen term - extending the loan term/amortization may reduce your monthly mortgage payment.
  • Long-term, fixed-rate option - enjoy the stability of knowing what your mortgage rate will be for the life of the loan.
  • Ability to change borrowers - borrowers can be added or removed when refinancing.

Modifying an ARM with FirstBank

Many of FirstBank's mortgage products qualify for a loan modification option. This is an attractive alternative to a refinance for many borrowers.

A modification allows you to retain or shorten the term of your loan and adjust the interest rate to current market rates.

  • Example 1: You can modify your 7-year ARM product to another 7-year ARM product at current market rates, providing an additional fixed-rate term of 7 years.
  • Example 2: You can modify your 7-year ARM with a shorter maturity fixed-rate portfolio mortgage.

Mortgage Modification Benefits:

  • The shorter-term or accelerated amortization reduces the principal balance over a shorter period of time, so you pay off the loan sooner.
  • Modifying to another ARM product will allow you to lock in another 5 or 7 year fixed-rate period at the current market rate.
  • Modifying to a lower interest rate can lower the monthly mortgage payment and the amount of interest paid over the entire term of the loan.
  • Fewer documentation and underwriting requirements than a standard or cash-out refinance.
  • Modifications typically have fewer fees and faster processing times than a standard or cash-out refinance.

Disclosures

All loans are subject to underwriting approval. FirstBank determines actual loan qualification only after receipt of a complete loan application and analysis of pertinent information, such as (but not limited to) credit history, income documentation, and property valuation. Fees and restrictions apply. Survey fees and flood insurance may be required for some loans. See any FirstBank location for complete details.