FAQ Category: Adjustable Rate Mortgage
Who is People Driven Credit Union’s Mortgage Specialist?
Meet Our PDCU Mortgage Specialist Michelle Dzon is authorized to act as an agent on behalf of People Driven Credit Union. Contact her for personalized assistance with your mortgage needs. Michelle Dzon Member First Mortgage michelle.dzon@memberfirstmortgage.com Connect with Michelle 616-301-1714 | NMLS ID: #401292
Continue ReadingWhat is private mortgage insurance (PMI), and when is it required?
Private mortgage insurance, or PMI, is insurance that helps protect the lender if a borrower stops making payments on a conventional mortgage loan. PMI is typically required when your down payment is less than 20% of the home’s purchase price or original value. When PMI is usually required PMI is most commonly required on a conventional mortgage when you put ...
Continue ReadingCan I refinance an ARM to a fixed-rate mortgage?
Yes, many borrowers choose to refinance their ARM to a fixed-rate mortgage before the adjustable period begins to lock in a stable interest rate and predictable monthly payments. Refinance
Continue ReadingHow can I determine if an ARM is right for me?
Consider your financial situation, how long you plan to stay in the home, and your risk tolerance for potential interest rate changes. ARMs can be a good choice if you plan to sell or refinance before the adjustable period begins or expect interest rates to remain stable or decline.
Continue ReadingIs there a prepayment penalty on an ARM?
Some ARMs may have prepayment penalties, but People Driven Credit Union does not. You can refinance or pay off your Adjustable Rate Mortgage with PDCU early without any prepayment penalties.
Continue ReadingAre there limits on how much the interest rate can change?
Yes, ARMs often have caps that limit how much the interest rate can increase at each adjustment period and over the life of the loan. These caps provide some protection against large payment increases.
Continue ReadingWhat factors determine how the ARM interest rate adjusts?
ARM interest rates adjust based on a specific index (such as the Treasury index) plus a margin set by the lender. When the index rate changes, the interest rate on your loan adjusts accordingly.
Continue ReadingWhat are the risks with an ARM loan?
The main risk with an ARM loan is that your monthly payments can increase if interest rates rise. Understanding the potential for payment changes is important to ensure that you can afford higher payments if the rate adjusts upward.
Continue ReadingWhat are the benefits of an ARM?
ARMs typically offer lower initial interest rates compared to fixed-rate mortgages, which can lead to lower initial monthly payments. This can be beneficial if you plan to sell or refinance before the adjustable period begins.
Continue ReadingWhat are the initial and adjustment periods?
The initial period is when the interest rate on an ARM is fixed. After this period, the rate adjusts at regular intervals. For example, a 7/1 ARM has a fixed rate for the first seven years and then adjusts once every 12 months.
Continue ReadingWhat are the common terms for ARMs?
ARMs are often described with two numbers, such as 5/5, 7/1, or 10/1. The first number indicates the initial fixed-rate period (in years), and the second number indicates how often the rate will adjust after the initial period (in years).
Continue ReadingHow does an ARM differ from a fixed-rate mortgage?
Unlike a fixed-rate mortgage, where the interest rate remains constant throughout the loan term, an Adjustable Rate Mortgage has an interest rate that adjusts periodically. This means your monthly payments can increase or decrease over time based on changes in the interest rate.
Continue ReadingWhat is a NMLS ID?
An NMLS ID is a unique identification number assigned to mortgage loan originators and mortgage lending institutions through the Nationwide Multistate Licensing System & Registry. It helps identify the person or company handling your mortgage and supports transparency in the mortgage process. Why it matters An NMLS ID allows consumers to verify the identity and licensing information of a mortgage ...
Continue ReadingWhat documents do I need to apply for a mortgage?
When you apply for a mortgage with People Driven Credit Union, you will generally need documents that help verify your identity, income, assets, employment, and insurance information. Having these items ready can help move your application along more smoothly. Documents you may need for a PDCU mortgage application Copy of your driver’s license or state-issued ID, to verify your identity ...
Continue ReadingHow do I check the status of my loan application?
To check the status of your loan application, contact People Driven Credit Union at 248-263-4100 during business hours or reach out to your assigned loan specialist if you have their contact information. Be ready to verify your identity and share details such as your name, member number, or application number so we can review your application with you. When you ...
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