Skip to Content
Welcome to 1st Source Bank! Our system detects the security of your connection is outdated. Please do not enter any confidential information on our site until you upgrade your browser to its latest version. Out-of-date browser software provides an opportunity for scams and could expose your financial data to fraud. 1st Source values the safety and security of our clients' accounts and information.
 
Should you have any questions or continue to have an issue, please contact our Customer Service Center at (574) 235-2000 or (800) 513-2360. Thank you for your cooperation and patience.
 
Our system cannot verify the security of your device. Please click here to try a page refresh. If you continue to get this message, please do not enter any confidential information on our site. 1st Source values the safety and security of our clients' accounts and information.
 
Should you have any questions or continue to have an issue, please contact our Customer Service Center at (574) 235-2000 or (800) 513-2360. Thank you for your cooperation and patience.
Welcome to 1st Source Bank! Your Internet Explorer browser is viewing our site in "Compatibility Mode". To properly view our site, we ask to follow these four simple steps to remove 1stsource.com from Compatibility View. This should take only a minute to resolve.

Should you continue to have an issue, please contact our Customer Service Center at (574) 235-2000 or (800) 513-2360. Thank you for your cooperation and patience.
Welcome to 1st Source Bank. To avoid feature functionally loss on 1stsource.com, potential interruption to your online banking and to assure better protection of your device, update the browser you are using as soon as possible. Out-of-date browser software provides an opportunity for scams and could expose your financial data to fraud. 1st Source values the safety and security of our clients' accounts.

For security reasons, we could soon disable access to 1st Source Online Banking for anyone using an out of date browser. Update your Internet browser today. For instructions on how to perform the update contact a reputable computer professional for assistance.

If you require immediate access, you may use this InfoSource Online Banking link to login.
1st Source Bank Home
Sign In To Online Banking
  • 1st Source Bank Home
  • Sign In To Online Banking
  • Locations
  • Contact Us
  • Help
  • Personal
    • Personal Online/Mobile
      Personal Online Banking
      • Sign up for Online Banking ⇨
      • Bill Payment
      • e-Statements
      • Zelle
      • Money Management
      • Purchase Rewards
      • Bank-to-Bank Transfer
      • Quicken Direct Connect
      • Shared Access
      • Spanish Option
      Access Your Accounts
      Mobile & Text Banking
      • Personal Mobile App
      • Smartwatch App
      • Text Banking
      • Voice Banking
      Alexa
      CardValet® App
      Digital Wallet
      • Masterpass
      Online/Mobile Advice
      • Website Password Strategies
      • Common Phone Scams
      • Understanding Basics on Mobile Payments
      Online/Mobile Help
      • How to Register for Mobile?
      • How to Make a Mobile Deposit
      • Need Help Logging In?
    • 1st Source Bank Personal Checking
      Our Checking Accounts
      • Your Account Options
      • Personal Checking Help
      • What's My Routing Number?
      • Reorder Checks
      • Private Banking
      1st Source Bank Personal Overdraft Services
      • Debit Card Overdraft Coverage
      • Overdraft Transfer Service
      • Overdraft Line of Credit
      Related Services
      • Debit Card/ATM Card
      • Identity Theft Protection
      • Online/Mobile Banking
      Checking Advice
      • How to Switch to 1st Source
      • Intro to Online Billpay
      • Avoiding NSF & Overdraft Fees
    • Personal Savings
      Savings Accounts
      • EveryDay Interest Savings Account
      • Cubs 1st Savings Account
      • e-Student Savings Account
      • Holiday Savings Account
      • Portfolio Investment Account
      Certificates of Deposit
      • Open a CD Now ⇨
      Individual Retirement Account (IRA)
      • Open an IRA Now ⇨
      Health Savings Account (HSA)
      • Open an HSA Now ⇨
      Savings Advice
      • Personal Savings Laddering Strategies for CDs
      • Build Savings with Direct Deposit
      • Personal Advice Building a Rainy Day Fund
      • Personal Advice Budgeting a Savings Plan
      Personal Savings Help
      • What are the Transaction Limits?
    • 1st Source Bank Personal Loans
      Consumer Loans
      • Apply for a Loan ⇨
      • Auto Loans
      • Consumer Personal Loans
      • Home Equity Line of Credit
      • Home Equity Term Loan
      • Home Improvement Loans
      • Credit Starter Loans
      1st Source Bank Personal Credit Card
      • 1st Source Bank Apply for a Credit Card ⇨
      • 1st Source Bank Online Access
      Auto Loan Calculators
      • Personal Compare Two Vehicle Loans
      • Calculate a Vehicle Payment
      • Vehicle Affordability by Term
      Personal Loan Calculators
      • Personal Low Rate or Cash Back?
      • Transfer Credit Card Balances
      • Save or Pay Off Debt?
      • Make Bi-Weekly Payments
      1st Source Bank Personal Loan Advice
      • Credit & Debit Management
      • Credit and Debt Calculators
      • Our Calculate a Mortgage Payment
      • Calculate a Vehicle Payment
      Loan Help
      • Lower a new loan rate
      • How to make loan payments
      • Our minimum loan amounts
    • Personal Mortgage
      Personal Mortgage Loans
      • Apply for a Mortgage ⇨
      • Check Application Status ⇨
      • Personal Home Equity Line of Credit (HELOC)
      • Home Equity Term Loan
      • Private Banking
      • Refinancing
      Meet Our Team
      Mortgage Advice
      Home on Time Planner
      Homebuyer's Guide
      • Mortgage Basics
      • Getting Pre-Approved
      • Finding a Home
      • Making an Offer
      • Insuring Your Home
      • Closing Your Loan
      • Determine How Much You Can Afford
      Mortgage Calculators
      • Calculate Mortgage Payment
      • Compare Two Mortgage Loans
      • Personal Home Affordability
      Home Equity Calculators
      • Equity Loan or Line of Credit
      • Consolidating Debt with Home Equity
    • Wealth Management Investments/Planning
      Wealth Management
      • Estate and Tax Planning
      • Trust and Estate Administration
      • Investment Management
      • Philanthropic Services
      • Private Banking
      • Here for you in Florida
      Personal-Investment Manage Your Accounts
      • Learn More About Wealth Advisory Online
      • Access Wealth Advisory Online
      Investing
      • Overview of Services: 1st Source Asset Advisors
      • Meet Our Financial Consultants
      • Manage Your Accounts
      • Guided Wealth Portfolios | Sophisticated Online Platform
    • 1st Source Bank Personal Insurance
      Property / Casualty
      • Get an Insurance Quote ⇨
      • Property Casualty and Personal Insurance
      • Car & Automobile Insurance
      • Homeowners Insurance
      Life Insurance
      • Get a Life Insurance Quote ⇨
      Insurance Advice
      • 1st Source Insurance Locations
      • Why Choose 1st Source
      Insurance Help
      • Report a Claim
  • Business
    • Business Treasury Services
      1st Source Bank's Business Treasury Services
      • Treasury Services Solutions
      Business Online/Mobile
      • Business Banking Online
      • BBO on the Go
      • Business Bill Pay
      • QuickBooks
      Deposit Services
      • Remote Deposit Express
      • Lockbox Services
      Merchant Card Services
      • PCI Compliance Management Program
      Business Fraud Protection
      • Protecting your Business Computers
      • Protecting Your Business from Scammers
      Business Treasury Services Help
      • Business Mobile Banking
    • 1st Source Bank's Business Checking
      Business Checking Accounts
      • Business Value Checking
      • Business Business Checking
      • Business Checking with Interest
      • Business Analysis Checking
      • Community Not-for-Profit Checking
      Business Debit Card
      Business Checking Overdraft Services
      Business Checking Advice
      1st Source Bank Business Checking Help
      • What's my routing number?
      • How do I reorder checks?
    • 1st Source Bank's Business Loans
      Business Loans
      • Financing Options
      • Apply for a Business Loan
      • I would like a Business Banker to contact me
      Leasing
      • Leasing Benefits
      • Leasing Applications
      Business Credit Card
      • Apply for a Credit Card ⇨
      • Online Access
      Business Loan Advice
      1st Source Bank Business Loans Help
    • 1st Source Bank Business Specialty Financing
      More detail on Business Specialty Financing
      • Aircraft and Helicopter
      • Auto and Light Truck
      • Construction Equipment
      • Environmental Equipment
      • Shuttle & Luxury Bus
      • Step Vans
      • Funeral Cars
      • Commercial Lessor
      • Heavy and Medium Duty Truck
      • Motor Coach
    • Industry Expertise
      Industry Solutions
      • 1st Source Bank Business Agriculture
      • Healthcare
      • Non-Profit Businesses
      • Solar Financing
      • Women's Financial Group
    • Our Business Insurance
      Business Business and Commercial Insurance
      • Business Commercial Insurance
      • Business Insurance Employee Benefits
      • Business Risk Management and Loss Control
      Advice and Planning
      • Personal Why Choose 1st Source Insurance
      Business Insurance Help
      • Personal Claim Reporting
      Business Insurance Links
      • Client Connect
      • Indiana Department of Insurance
      • Insurance Information Institute
    • 1st Source Bank Retirement Plan Services
      Business Retirement Plan Services
      • Business Retirement Plans
      • Business Business Retirement Plan Services
      • Business Why Choose Us
    • Beneficial Ownership Rule
  • Advice
    • 1st Source Personal Personal Advice
      Advice for Family Finances
      • Personal Identity Protection
      • Kids Money
      Credit and Debt
      • Credit Help
      • Debt Counseling
      Personal Money Management Money Management
      • Improve Your Finances
      • Create a Budget
      • Build your Savings
      • Pay Off Debt
      Workplace Finances
      • Personal Advice Employee Benefits
      • Paycheck Planning
      • Retirement Plans
      Home Ownership
      • Buying a Home
      • Advice for Mortgage
      • Home Equity
      • Refinancing
      Paying for College
      • Saving
      • Financing
      • Repaying Student Loans
      1st Source Bank Retirement
      • Saving for Retirement
      • Social Security
      • Living in Retirement
      Advice Security Center
    • Personal Calculators
      Credit and Debit Tools
      • Calculate Your Vehicle Payment
      • Advice Low Rate or Cash Back?
      • Compare Vehicle Loans by Term
      • Compare & Calculate Two Vehicle Loans
      • Are Credit Card Balance Transfers Worth It?
      • Debt Consolidation
      • How Long Will it Take to Pay Off a Credit Card?
      Family Finance Tools
      Home Ownership Tools
      • Calculate a Mortgage Payment
      • Buying a Home Home Affordability
      • Compare Two Mortgage Loans
      • Adjustable Rate Mortgage Analyzer
      Retirement Tools
      • How Long Will my Retirement Savings Last?
      • 401(k) Calculator
      • Retirement Income Estimator
      • Estimate Social Security Benefits
      Managing Money Tools
      • The Impact of Saving More
      Paying for College Tools
      • Save for College
    • Business Advice
      Run A Business
      • Insurance for Your Business
      • Communications and Work Anywhere
      • Managing Healthcare
      • Human Resource Solutions
      • Legal Resources
      • Running Your Office
      • SBA/Government Resources
      • Setting Up Your Business
      • Business Travel
      • Veteran Assistance
      Managing My Finances
      • Getting Capital
      • Exiting Your Business
      • Payroll Options
      • Optimizing Cash Flow
      • Bank Anywhere
      • Managing Your Financials
      Growing My Business
      • Providing Customer Service
      • Direct Selling Solutions
      • Selling Internationally
      • Branding & Product Marketing
      • Internet Marketing
      Industry Resources
      • Accounting
      • Construction
      • Dental
      • Legal
      • Medical
      • Retail
      • Real Estate
      Protecting My Business
      • IT Theft, ACH Fraud, & Tips
      Business Columns/Blogs
      • Business Finance
      • General Small Business
      • Technology & Social Media
      • Women in Business
    • Advice Business Calculators
      Business Calculators
      • Breakeven Analysis
      • Business Debt Consolidation
      • Business Valuation
      • Cash Flow Calculator
      • Commercial Loan
      • Debt Service Coverage
      • Equipment Buy vs. Lease
      • Financial Ratios
      • Inventory Analysis
      Financial Calculators
      • Like Kind Exchange
      • Profit Margin Calculator
      • Repo of Personal Property from a Deferred Payment Sale
      • Repo of Personal Property from an Installment Payment Sale
      • Repossession of Real Property
      • Working Capital Needs
      Business Worksheets
      • Business Plan Template
      • Income Statement Template (Excel)
      • Cash Flow Template (Excel)
      • Balance Sheet Template (Excel)
      • Budget Variance Template (Excel)
      • Start-up Expense Template (Excel)
      Company Intelligence
      Local Resources
  • About Us
    • Locations
    • Side-by-Side Banking
    • 1st Source Bank Community Involvement
      Community Leadership Award
      • Ernestine M. Raclin Award Winners
      Ernestine M. Raclin
      1st Source Foundation
    • 1st Source Bank Career Opportunities
    • News
    • Investor Relations
      Corporate Overview
      • Corporate Profile
      • Officers & Directors
      • Governance Documents
      • Committee Charting
      Stock Information
      • Stock Quotes
      • Historic Prices
      • Dividends
      SEC Filings
      • Documents
      • Annual Reports
      • Insider Filings
      • Institutional Ownership
      Financial Information
      • Financial Highlights
      • Financial Statements (As Reported)
      • Total Return Performance
      News & Market Data
      • Press Releases
      • Presentations
      Other Information
      • Information Request
      • Email Notification
      • FAQ
Frequently Asked Questions
You are here:
  1. Home
  2. FAQ
  3. What is an adjustable rate mortgage?

What is an adjustable rate mortgage?

An adjustable rate mortgage, or an "ARM" as they are commonly called, is a loan type that offers a lower initial interest rate than most fixed rate loans. The trade off is that the interest rate can change periodically, usually in relation to an index, and the monthly payment will go up or down accordingly.

Against the advantage of the lower payment at the beginning of the loan, you should weigh the risk that an increase in interest rates would lead to higher monthly payments in the future. It's a trade-off. You get a lower rate with an ARM in exchange for assuming more risk.

For many people in a variety of situations, an ARM is the right mortgage choice, particularly if your income is likely to increase in the future or if you only plan on being in the home for three to five years.

Here's some detailed information explaining how ARM's work.

Adjustment Period

With most ARMs, the interest rate and monthly payment are fixed for an initial time period such as one year, three years, five years, or seven years. After the initial fixed period, the interest rate can change every year. For example, one of our most popular adjustable rate mortgages is a five-year ARM. The interest rate will not change for the first five years (the initial adjustment period) but can change every year after the first five years.

Index

Our ARM interest rate changes are tied to changes in an index rate. Using an index to determine future rate adjustments provides you with assurance that rate adjustments will be based on actual market conditions at the time of the adjustment. The current value of most indices is published weekly in the Wall Street Journal. If the index rate moves up so does your mortgage interest rate, and you will probably have to make a higher monthly payment. On the other hand, if the index rate goes down your monthly payment may decrease.

Margin

To determine the interest rate on an ARM, we'll add a pre-disclosed amount to the index called the "margin." If you're still shopping, comparing one lender's margin to another's can be more important than comparing the initial interest rate, since it will be used to calculate the interest rate you will pay in the future.

Interest-Rate Caps

An interest-rate cap places a limit on the amount your interest rate can increase or decrease. There are two types of caps:

  • 1. Periodic or adjustment caps, which limit the interest rate increase or decrease from one adjustment period to the next.
  • 2. Overall or lifetime caps, which limit the interest rate increase over the life of the loan.

As you can imagine, interest rate caps are very important since no one knows what can happen in the future. All of the ARMs we offer have both adjustment and lifetime caps. Please see each product description for full details.

Negative Amortization

"Negative Amortization" occurs when your monthly payment changes to an amount less than the amount required to pay interest due. If a loan has negative amortization, you might end up owing more than you originally borrowed. None of the ARMs we offer allow for negative amortization.

Prepayment Penalties

Some lenders may require you to pay special fees or penalties if you pay off the ARM early. We never charge a penalty for prepayment.

Contact a Originator

Selecting a mortgage may be the most important financial decision you will make and you are entitled to all the information you need to make the right decision. Don't hesitate to contact a Originator if you have questions about the features of our adjustable rate mortgages.

Tagged under:
  • 1st Source Bank Personal Help
  • Frequently Asked Questions Mortgage Help
  • Personal Mortgage Loan Programs, Rates & Fees Help
Back To FAQ
Customer Service
  • Need Help?
    • Chat Now
    • Call 800-513-2360
  • 1st Source Bank FAQ
  • Online / Mobile Banking
  • Lost / Stolen Card or Fraud
  • Reorder Checks
Personal Banking
  • Personal Checking
  • Consumer Loans
  • Mortgage Loans
  • Personal Insurance Coverage
Electronic Services
  • Log in to Online Banking
  • Mobile/Text Banking
  • Text Banking and Alerts
  • Online / Mobile Enrollment
  • Business Banking Online
  • BBO on the Go
Sound Advice
  • 1st Source Bank Personal Advice
  • Small Business Advice
About Us
  • Jobs and Career Opportunities
  • Latest News
  • Branch Locations
  • Investor Relations
Other Info
  • 1st Source Security Center
  • Customer Privacy
  • 1st Source Bank Disclosures
  • 1st Source Bank Terms of Use
  • Sitemap
Routing Number: 071212128
Copyright 1999 - 2019
1st Source Bank
 | 
All Rights Reserved
Connect with us