The initial interest rate on an ARM is usually lower than the rate on a conventional fixed-rate loan.
The ARM interest rate is based on an index that reflects current market conditions plus a margin which is added to the index. The index value varies and is available upon request or at application time.
Capitol Federal's True Blue® ARM loans include an annual cap and a lifetime cap. The annual cap limits the amount we can increase or decrease your interest rate annually. The lifetime cap is your maximum interest rate during the life of the loan.
ARM loan plans:
* 3/1 ARM - The interest rate on a 3/1 ARM will remain fixed at the initial rate for the first three years. After that, the interest rate will change annually based on the value of the index plus the margin, subject to annual and lifetime interest rate adjustment caps.
* 5/1 ARM - Identical to the 3/1 ARM except the initial rate is fixed for the first five years.
* 7/1 ARM - Identical to the 3/1 ARM except the initial rate is fixed for the first seven years.
