Adjustable Rate Loans
Wailuku Federal Credit Union offers a variety of adjustable rate loans to match your goals. With adjustable rate loans, your interest rate is fixed for a term of 5, 7 or 10 years. After the fixed rate term, your interest rate can fluctuate due to changes in the financial markets. Therefore, your monthly payments will also fluctuate. In general, an adjustable rate loan will have a lower starting interest rate than a fixed rate loan, and it should be considered if you plan on staying in the home for a relatively short period of time, such as 5 years.
For your protection, though, there are certain restrictions to the changes to your adjustable rate. First, after the fixed rate period your rate will only change once per year. Second, your rate can't increase by more than 2% or 5% (depending on the terms of your loan) during each annual adjustment period. This is known as an adjustment cap. In addition, your rate can’t increase by more than 5% over the life of your loan. This is known as a lifetime cap.
Contact WFCU today to sit down with one of our loan experts and see if a adjustable rate loan is the best option for achieving your goals.