Adjustable Rate Mortgage (ARM)

As its name suggests, an Adjustable rate Mortgage (ARM) does not have a fixed rate for the life of the loan. Instead, there is a lower introductory interest rate that will change after a certain number of years that you set when getting the loan. Depending on market conditions at the end of the initial time period, your interest rate could increase or decrease, meaning your monthly payment will go one or the other. If you don’t plan to stay in this home too long or you plan to pay off the loan within about 10 years, an ARM can be a good choice for you.

Wondering about how to read the term options? Learn more.

ARMs have caps to place limits on when and how drastically your interest rate can change. Lenders with the same introductory rate might have different caps on the life of the loan. The initial cap determines how much the interest rate can change during your first adjustment period. The subsequent cap, also known as the periodic or annual cap, controls how much the rate can change in future adjustments. There is also a lifetime cap that says what the total interest rate increase can be for the life of the loan. Finally, the payment cap represents the total increase that is allowed on your ARM payment.

If this seems like a lot to understand, never fear! We will give you personal guidance to make sure you understand the caps and guide you toward the best option for your current and future budget.

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Take a look at this chart to compare the mortgage options. This can help you best match your situation

The first number (3, 5 ...) indicates the number of years your initial rate is in effect. 

The second number (6, 5) indicates how often the rate will adjust after that initial period. 

In other words, a 3/6 ARM will have the initial interest rate for three years; after that, it will adjust every 6 months. Similarly, a 5/5 ARM will have the initial interest rate for five years and adjust every five years after that.

Adjustable rate mortgages are available in 3/6, 5/6, and 7/6 ARM terms with 30-year amortization terms, as well as 5/5 30-year and 5/5 15-year terms.

Yes! When you refinance your home, you actually pay off your existing mortgage and replace it with a new one. You might do this to get a lower interest rate or to shorten the term of your mortgage. You can learn more about refinancing your mortgage with Elements.

The specific amount of your closing costs will vary. A home loan often involves many fees, such as the appraisal fee, title charges, closing fees, and state or local taxes. These fees vary from state to state and also from lender to lender. Your Elements Mortgage Loan Originator will review all costs with you based on your specific loan amount, purchase price, and home value.

Third Party Fees

Third party fees are ones that we collect and pass on to the person who actually performed the service. These can include the appraisal fee, the credit report fee, the settlement or closing fee, the survey fee, tax service fees, title insurance fees, flood certification fees, and courier/mailing fees. For example, an appraiser is paid the appraisal fee, a credit bureau is paid the credit report fee, and a title company or an attorney is paid the title insurance fees. 

Taxes and Other Unavoidable Costs

These fees include state/local taxes and recording fees and will most likely have to be paid regardless of the lender you choose. If some lenders don't quote you fees that include taxes and other unavoidable fees, don't assume you won't have to pay it. It is possible that a lender who doesn't tell you about the fee hasn't done the research necessary to provide accurate closing costs. 

Lender Fees

Lender fees such as points, document-preparation fees, and loan-processing fees are retained by the lender and are used to provide you with the lowest rates possible. This is the category of fees that you should compare very closely from lender to lender before making a decision. Elements charges a standard $900 origination fee on all mortgages.

For more information, call us at 1-800-561-9433.

Call us at 1-800-561-9433 to see if you can be pre-approved for a loan so that you know what price range you can afford, to evaluate the monthly costs of a mortgage, and to see how much of a loan you can afford. The pre-approval will also give you some leverage when negotiating with the sellers.

Get Preapproved

Yes! Our First-Time Homebuyer Program allows you to purchase a new home with as little as 5% down with no Private Mortgage Insurance (PMI). The loans can be up to $350,000, and it’s okay if your down payment was gifted to you. We will also be there to give you guidance at each step through the process.

We also have other programs that are available with even lower down payment terms such as FHA, VA, and USDA loans. For more information, call us at 1-800-561-9433.

Your monthly mortgage payment is made up of four components: principal, interest, property taxes, and homeowner’s insurance (referred to as "PITI"). 

Principal and Interest

Principal and interest are based on the loan amount, interest rate, and term (amortization) of your loan. 

Property Taxes

Property taxes are assessed annually. The amount of your taxes is divided by 12 months in order to determine how much will be collected from you as part of your monthly payment.

Insurance

Homeowner’s Insurance is also paid annually. The amount of your annual premium is divided by 12 months as well. 

Private Mortgage Insurance (PMI) can also be a component of your monthly mortgage payment. This is insurance that the lender obtains to protect them against any loss if you stop making payments on your loan. PMI is typically required on Conventional loans if you do not put at least 20% down on a purchase or have 20% or more equity in your property on a refinance.

Getting Started

You can apply online in 15-20 minutes! Submit your application anytime. Or call us at 1-800-561-9433 to apply by phone. When you apply, have ready your government-issued ID (driver’s license, state ID, or passport) and estimates of your household income, assets, home value and price you paid for your home. 

Gathering Documentation

We’ll contact you within one business day after you submit your application to review documentation that we'll need from you. We’ll also answer any questions you may have. 

Application Review & Approval 

Once you have supplied your documents, your loan will be reviewed by an underwriter. After the underwriter review, your Elements Mortgage Loan Originator and Loan Processor will work together to obtain any further documentation that is needed to close your loan, including the appraisal and title work. 

Closing

Once your loan has received final approval, your closing will be scheduled at a location convenient for you. That's it — your mortgage is complete! Application to closing takes an average of 30 days. 

Get Started

We work with partners in our industry to best serve your home loan needs. Since 2017, Elements Financial began an alliance with Dovenmuehle Mortgage, Inc. (DMI) to provide servicing for the mortgage loans directly held by our credit union. DMI is known in the industry for professional service and convenient technology as one of the leading mortgage servicers in the U.S. They allow us to provide the following member benefits:

• Access to online mortgage tax forms;
• Expanded general mortgage information online and within your monthly statement, such as escrow details;
• Continued 24-hour online access to your account and call center support.

The alliance with DMI has no impact on the terms of your mortgage. Your loan is still owned by Elements in cases where DMI provides the servicing.

There are important things to note about your mortgage after closing. We've put together a helpful advice article that includes the top 5 things you need to know about managing your mortgage.

Read the Advice Article

Like a Bank, Only Better!

Personal Mortgage Guidance

Buying a home can be a bit overwhelming. But don’t worry. We’ll be with you every step of the way to guide you through the mortgage process, from pre-approval all the way to closing. You’ll have your personal mortgage expert’s cell phone number, so you can get all your questions answered very quickly. 

Better Rates. Fewer Fees.

Because we’re a credit union, we return profits to members in the form of reduced fees, higher savings rates and lower loan rates.

Trusted Advice. Fresh Approach.

We pride ourselves in being a trusted source for financial education. We come to your workplace to answer questions and can provide you with a dedicated Mortgage Loan Originator⁴ to guide you through the entire mortgage process.

Respected Locally. Accessed Globally.

Headquartered in Indianapolis since 1930, we rank among the top 3% of credit unions nationally⁵. We serve members in all 50 states and 50+ countries. You’ll have access to 5,000+ shared branches nationwide and 78,000+ surcharge-free ATMs globally.

High Tech. Human Touch.

Our technology makes banking with Elements easy. From quick digital applications to online and mobile banking, we’ll be by your side wherever you go. We’re here for you with member service available 24/7 and live chat during the workday.

Get Started

3 Easy Steps to Apply

1. Apply online - Do this online whenever you have 15-20 minutes to spare. Or call 1-800-561-9433 to get started.
2. Take our call - We'll contact you within one business day after you submit your application to go over what documentation we'll need and to answer your questions.
3. Schedule your closing - We'll stay in touch with you throughout the mortgage process. Then, if you're approved, we'll schedule your closing at a location convenient for you.

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