Main Content
couple signing for their new house
Mortgage

Enjoy lower initial interest rates and monthly payments at the beginning of the life of your mortgage with an ARM loan.

See What You Qualify For

dollar sign icon

Loan Options

7/6 or 10/6 ARM

 

 

dollar sign icon

Payment Caps

Limit Payment Increases

 

clock icon

Rate Locks

Up to 270 Days

 

 

interest icon

Down Payments

As Low as 5%

 

Background Image
roadway with sunlight shining on it through trees

Not sure where to start? We can help.

We have the expertise to find a loan that best fits your goals. 

Meet our Mortgage Experts

Schedule Appointment

Background
Blue

What Is an Adjustable-Rate Mortgage?

An adjustable-rate mortgage (ARM) begins at a fixed rate for a set amount of years, then has the ability to fluctuate periodically. We offer two ARM options for homebuyers:

Conventional 7/6
This offers a fixed rate for 7 years. Then, rate adjustments are possible every 6 months thereafter.

Conventional 10/6
This offers a fixed rate for 10 years. Then, rate adjustments are possible every 6 months thereafter.

 

If you're ready to get started, you can quickly and easily start the home purchase process by getting pre-approved online.

Start the Home Purchase Process

ARM icon of house with moneyWhy Choose an Adjustable-Rate Mortgage?

 

Affordability

ARMs may provide lower initial interest rates and initial monthly payments than a fixed-rate mortgage, giving you better affordability due to lower upfront payments.

 

Flexibility

An ARM offers greater flexibility, making it ideal for borrowers anticipating big changes. For example, if you plan to move or sell your house, you can enjoy a lower, fixed-rate for a set period, then sell before the adjustable phase begins.

 

Payment Caps

ARMs limit the amount of rate change that can occur in certain periods of time when the rate becomes variable. There is a cap on how high or low the interest rate can go over the life of the loan.

 

Payments Can Decrease

Falling interest rates can drive down the index against which your lender benchmarks your ARM. If this occurs after your fixed term of 7 or 10 years, your monthly payment will drop. On the other hand, your payments could also increase based on the index.

 

Low Down Payments

A down payment is the amount of money that the homebuyer pays out-of-pocket towards purchasing the home With Midland States Bank, our ARMs require as low as 5% down.

Background
Light Grey
midland employee talking with client

Partnering with Midland States Bank

When you choose Midland States Bank, you'll experience several benefits:

  • Online application: Apply for an ARM in no time, wherever you are using your computer or mobile device.
  • Competitive rates: Start saving money with our competitive rates.
  • Full-service approach: Our experts can provide assistance at every step.
  • World-class customer service: We go above and beyond to ensure you have the best loan experience possible.
  • Mortgage expertise: Our mortgage experts have the knowledge and experience to assist with various needs.

Frequently Asked Questions

It depends on your goals and comfort level. If you plan to sell your home or pay off the mortgage before the adjustable rate increases, you'll save money. However, an ARM may not be the right option if you don't plan on selling and want consistent mortgage payments.

An ARM’s initial rate is fixed for a specified number of years at the beginning of the loan term and then adjusts every 6 months for the remainder of the term. The rate consists of a predetermined margin and will fluctuate due to variations in the index, which acts as the rate’s benchmark.

  • What is the Margin? The margin is a percentage point that remains the same throughout the life of the loan. Once the initial term ends, the new rate is determined by adding the margin to the index.
  • What is the Index? Midland States Bank recognizes the Secured Overnight Financing Rate (SOFR) as the index for ARMS. SOFR is the successor to LIBOR.

With a fixed-rate mortgage, the interest rate and your monthly principal remain the same throughout the loan's life span. An adjustable-rate mortgage offers interest rates that periodically change.

A 10/6 ARM loan is a type of adjustable-rate mortgage (ARM) that has a fixed interest rate for the first 10 years of the loan, and then the interest rate adjusts every six months after that. The interest rate on a 10/6 ARM loan can be lower than the interest rate on a fixed-rate mortgage, but it can go up or down after the 10-year fixed rate period.

A 7/6 ARM loan is a mortgage loan that has a fixed interest rate for the first 7 years of the loan, and then adjusts every 6 months after that. This type of loan can be a good option for borrowers who plan to sell or refinance their home within 7 years, or who expect their income to increase in the near future.

Here are some additional details about 7/6 ARM loans:

  • The interest rate on a 7/6 ARM can be lower than the interest rate on a fixed-rate mortgage, but it can increase after the fixed-rate period ends.
  • The amount that the interest rate can increase each time it adjusts is limited by the terms of the loan.
  • Borrowers may be required to pay a prepayment penalty if they sell or refinance their home before the end of the fixed-rate period.

It is important to carefully consider the pros and cons of a 7/6 ARM loan before you decide if it is the right type of loan for you. Our team of specialists is here to help guide you through the home financing process.

An ARM may make sense for borrowers who plan to sell their homes within the fixed-rate period, such as a 7/6 ARM or 10/6 ARM. This is because the interest rate will be fixed for a certain number of years, typically 7 or 10 years, and then it will adjust based on market conditions. If the borrower plans to sell their home before the adjustable-rate period begins, they will not be exposed to any potential interest rate increases.

Here are some other factors to consider when deciding whether an ARM is right for you:

  • Your financial situation. Can you afford the monthly payments if the interest rate increases?
  • Your plans for the future. Do you plan to stay in your home for a long time?
  • The current interest rate environment. Are interest rates expected to rise or fall?

Our team at Midland States Bank is here to help discuss your individual circumstances to determine if an ARM is the right choice for you.

No, ARM loans can be used for other purposes, such as refinancing an existing mortgage or consolidating debt. However, they are most commonly used for home purchases because they could offer lower initial interest rates than fixed-rate mortgages. This can be helpful for borrowers who are on a tight budget and need to keep their monthly payments as low as possible.

There are two main types of ARM loans: 7/6 ARM loans and 10/6 ARM loans. A 7/6 ARM loan has a fixed interest rate for the first seven years, after which the rate can adjust every 6 months. A 10/6 ARM loan has a fixed interest rate for the first ten years, after which the rate can adjust every 6 months. It is important to note that the interest rate on an ARM loan can increase significantly after the initial fixed-rate period ends. Therefore, borrowers should carefully consider their financial situation and whether they can afford to make higher monthly payments if the interest rate goes up.

Here are some additional things to consider when choosing an ARM loan:

  • The length of the initial fixed-rate period
  • The frequency of interest rate adjustments
  • The maximum interest rate that can be charged
  • Any prepayment penalties

It is also important to talk to a mortgage lender to get pre-approved for a loan before you start shopping for a home. This will give you an idea of how much you can afford to borrow and what your monthly payments will be. Stop by your local Midland States Bank branch or contact our team today if you’re ready to get started on your home buying journey.

Yes, an ARM loan is a type of variable rate mortgage. With an ARM loan, the interest rate can change periodically, usually in relation to an index. This means that your monthly payments could go up or down over time. Variable rate mortgages can be a good option for borrowers who plan to sell their home or refinance their loan before the interest rate changes significantly.

With an adjustable-rate mortgage (ARM), the interest rate changes periodically, usually in relation to an index. This means that your monthly payments may go up or down over time. With a fixed-rate mortgage, the interest rate stays the same for the life of the loan.

Here are some of the key differences between ARMs and fixed-rate mortgages:

  • Interest rate: With an ARM, the interest rate can change periodically, usually in relation to an index. With a fixed-rate mortgage, the interest rate stays the same for the life of the loan.
  • Monthly payments: With an ARM, your monthly payments may go up or down over time, depending on how the interest rate changes. With a fixed-rate mortgage, your monthly payments will stay the same for the life of the loan.
  • Total interest paid: Over the life of the loan, you may pay more interest with an ARM than with a fixed-rate mortgage. This is because the interest rate on an ARM can increase, which will increase your monthly payments.

If you are considering an ARM, it is important to understand how the interest rate works and how it could affect your monthly payments. You should also compare ARMs to fixed-rate mortgages to see which type of loan is best for you or consult a lending expert like Midland States Bank for one-on-one guidance.

Background
Light Grey

Why Midland States Bank? 

Midland States Bank is a financial services company specializing in adjustable-rate mortgages for customers in Illinois and Missouri. We provide a range of services and industry expertise to assist new and experienced home buyers. Take advantage of our homebuyer tools.

Mortgage Calculators

Online Account Opening

midland states bank sign against blue sky background

How to Get Started

Contact us today to speak with a mortgage expert and learn more about our ARM mortgage loans. If you're ready to begin the process, start the process to get pre-approved and see an estimate of what you can afford.

See What You Qualify For

Background
White with Top Border

house-icon Equal Housing Lender. Loans subject to credit approval and eligibility requirements. Bank NMLS #411141. To learn more, visit www.nmlsconsumeraccess.org. Member FDIC.