Log In
Start With a Lower Mortgage Payment
Adjustable Rate Mortgages: Lower Initial Payments
At a Glance
Lower initial monthly payments than a traditional mortgage
Interest rate is fixed for a specified term, then adjusted thoughout the life of the loan
A good choice for a starter home
Unlike a fixed rate mortgage, the interest rate on an adjustable rate mortgage (ARM) can change over the term of your loan, depending on market rates. An ARM loan offers a lower principal and interest payment for a period, then adjusts at specified intervals thereafter, meaning your payment may change over time based on market rates.
Citadel offers two ARM loans: a 7/6 ARM and 10/6 ARM. The ARM numbers show how long the initial fixed rate lasts and how often the rate can change afterward. For example:
- A 7/6 ARM has a fixed interest rate until the 84th month (7 years) and can change every 6 months after.
- A 10/6 ARM has a fixed interest rate until the 120th month (10 years) and can change every 6 months after.
Featured Mortgage Rates
*Offers are subject to credit approval. REG = Regular Rate. APR = Annual Percentage Rate. Read Full Disclosures.
Benefits of an Adjustable Rate Mortgage
- Lower initial monthly payments
- Increased budget flexibility and the opportunity to build savings or put extra cash toward your principal
- A good choice for a starter home or a home you don’t plan on being in for the full term of the loan
Qualifications for an Adjustable Rate Mortgage
An adjustable rate mortgage may be right for you if you meet the following qualifications:
- Good credit score, usually 620 or higher
- Lower debt-to-income (DTI) ratio, 50% maximum
- Down payment of at least 3%, or 20% to avoid private mortgage insurance (PMI)
It’s important to remember that you are qualified for an adjustable rate loan based on your ability to cover a higher monthly payment, not the initial lower payment. If you don’t meet the requirements for the higher payment, such as having other significant monthly payments or a lower income, you may not qualify for an ARM.
How does it work?
The initial fixed interest rate is based on the interest rate, loan amount, and total term of the loan when your loan is closed. This discounted rate, usually lower than 30-year fixed rates, lasts for 7 or 10 years, depending on the ARM loan selected.
After this initial period ends, the adjustable interest rate is based on an interest rate index plus a margin. Your interest rate can adjust when the initial fixed interest rate period ends, and every 6 months thereafter. Your adjustable rate will go up if the index's market rates go up. If they go down, your rate goes down.
Citadel ARM mortgage interest rates are based on the 30-Day Average Secured Overnight Financing Rate (SOFR) rate, rounded to the nearest 0.125% (currently .08%). More information about this index is available at SOFR Averages and Index Data - FEDERAL RESERVE BANK of NEW YORK (newyorkfed.org). Our current margin is 2.750%.
However, ARMs include terms that dictate how much your interest rate can change. Your interest rate will never increase or decrease more than 5 percentage points during the first adjustment, and 1% with each adjustment after the first, over the life of the loan.
Wondering what your monthly payments might look like?
Estimate my paymentContact an Advisor
Not sure yet? No problem. Our Loan Advisors will help answer your questions and walk you through every step of the loan process.
Frequently Asked Questions
Fixed Rate mortgages are the best product if you plan on living in the home for the next fifteen to thirty years and want the same principal and interest payment.
ARMS are the best product to keep payments lower for the fixed term. You can prepay at any time without penalty and shorten the term of your mortgage. If you won't be living in this home more than 10 years you may want to consider an ARM.
Interest rates can go up or down after the initial set term. Your rate can never be higher than 2% over your last rate or last adjustment and can never be higher than 5% over your initial rate.
Points can be purchased to lower the interest rate over the life of a mortgage. Points are based on the percentage of the amount borrowed. With a $100,000 mortgage, for example, 1 point is equal to 1% of $100,000, or $1,000.
Yes, we offer products that closing costs can be included in the loan.
To dispute an error with your Mortgage account or statement, please complete the Mortgage Error Resolution form. Once you complete the form please mail back to us at:
Citadel Credit Union
Attention: Mortgage Servicing
1209 West Chester Pike, Suite 201
West Chester, PA 19382
You may also scan the form and email it to: MtgErrorandInfo@CitadelBanking.com.
Still have questions? Visit our help center.
Adjustable Rate Mortgage (ARM)
An Adjustable Rate Mortgage (ARM) means that your payment may change in the future. Citadel ARM mortgages have a fixed rate for a period of time, then rates can adjust semi-annually. The fixed rate period varies based on the ARM loan you select and is shown right in the name of the ARM loan. Citadel offers two ARM loans: a SOFR 7/6 ARM and SOFR 10/6 ARM. The ARM numbers, “7/6”, show how long the initial fixed rate lasts and how often the rate can change afterward.
For Example:
• A 7/6 ARM has a fixed interest rate until the 84th month (7 years) and can change every 6 months after.
• A 10/6 ARM has a fixed interest rate until the 120th month (10 years) and can change every 6 months after.
What is a SOFR ARM?
SOFR is Secured Overnight Financing Rate, and is a referenced rate established to replace LIBOR (London Interbank Offered Rate). The Secured Overnight Financing Rate (SOFR) is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities.
How is my rate calculated?
The initial fixed interest rate is based on interest rate, loan amount, and total term of the loan when your loan is closed. This is the discounted rate and lasts for 7 or 10 years depending on the ARM loan selected.
The Adjustable Interest Rate is based on an interest rate index plus a margin. All of our Citadel ARM mortgage interest rates are based on the 30-Day Average SOFR rate, rounded to the nearest 0.125% (currently .08%). More information about this index is available at SOFR Averages and Index Data - FEDERAL RESERVE BANK of NEW YORK (newyorkfed.org). Our current margin is 2.750%.
How can my Interest Rate change?
Your interest rate can adjust when the initial fixed interest rate period ends, and every 6 months thereafter. Your interest rate will never increase or decrease more than 5 percentage points during the first adjustment, and 1% with each adjustment after the first, over the life of the loan.