BASKING RIDGE, N.J. -- The Credit Union Mortgage Alliance Network has launched an adjustable rate mortgage product that allows credit unions to offer their members a 6/2 adjustable rate mortgage with a lower, fixed-interest rate for the first six years of the loan and a rate that only adjusts every two years after that.
CUMAnet Assistant Vice President of Credit Union Relations Leo O'Donnell said the product is "very unique" and added that it is not offered by Fannie Mae or Freddie Mac.
Since the 6/2 ARM adjusts every other year, it will reach its lifetime cap later than a shorter term ARM. It also gives the borrower a longer period of time between potential interest rate changes.
The 6/2 ARM will never increase more than 5% above its start rate over the life of the loan. CUMAnet noted that this is lower than the standard cap of 6%. Terms of 30 or 40 years are available on the loan.
"Its competitive pricing, flexible terms and the fact that it only adjusts every other year, versus other products that adjust annually makes it an excellent mortgage product for many home buyers and for refinancing," O'Donnell said.