Less Call Center. More Calling Your Lender.
With Bluegrass Local Advantage, your mortgage comes with something you won’t find at a call center: a local lender who knows you.
With lower upfront lending costs of only $750 origination or processing fee, it’s a smart option for buying your first home, moving out of construction financing, or simply getting into your home today while keeping your options open for tomorrow.*
Program Overview
This 7/1 ARM Mortgage Special (In-House Only; adjustable rate mortgage) provides qualified borrowers with a fixed introductory rate for the first seven years of a 30-year loan term, followed by annual rate adjustments thereafter. This special program also includes reduced borrower-paid closing costs. Purchase and refinances are both eligible for this program.
Key Product Features
| FEATURE | DETAILS |
|---|---|
| Collateral | 1st Mortgage on Primary Residence within the Bank’s approved trade area |
| Loan to Value (LTV) Maximum | 85% or 89% |
| Initial Fixed Rate | X.XX% for the initial 7-year fixed period (with direct deposit and auto debited loan payments) or X.XX% |
| Term | Up to 360 months/7 years |
| Adjustment Frequency | Annual adjustments beginning after year 7 |
| Index | 7-Year Constant Maturity Treasury (CMT) |
| Margin | Derived from the Bank’s Loan Pricing Matrix |
| Periodic Maximum Adjustment | 2% increase or decrease per adjustment period |
| Rate Floor | 4.50% minimum interest rate |
| Rate Ceiling | 15.00% maximum lifetime interest rate |
| Borrower Closing Costs | $750 Origination Fee paid by borrower at closing. Borrower remains responsible for prepaid items, escrow funding, owner’s title insurance, taxes, insurance premiums, association fees, and other non-lender closing costs. Escrow of taxes and insurance are required. |
| Bank-Paid Closing Costs | • Appraisal • Appraisal Review (if applicable, per bank’s loan policy) • Credit report • Flood Determination • Recording Fees • Title Examination Fees • Attorney Closing Fees |
| Maximum Loan Amount | $1,500,000 |
Eligibility
Available to qualified borrowers subject to credit approval, income verification, collateral evaluation, and applicable underwriting guidelines. Minimum average credit score of 765 is required.
Rate Adjustment Details
Following the initial 7-year fixed-rate period, the interest rate will adjust annually based on the current 7-Year CMT index plus the applicable margin established through the Bank’s Loan Pricing Matrix. Each annual adjustment is subject to a 2% cap upward or downward. The interest rate will never fall below 4.50% or exceed 15.00% over the life of the loan.
Closing Cost Information
Borrowers are responsible for a $750 origination fee and other Borrower Closing Costs (see list below) as their out-of-pocket closing cost contribution. The bank will pay other eligible closing costs associated with the loan closing. Lender and Owner Title insurance costs are excluded from bank-paid closing costs; therefore, the maximum loan amount under this program is capped at $1,500,000. Be sure to use an attorney with E&O insurance to cover your loan amount.
Important Disclosure
Rates, terms, and program availability are subject to change without notice. All loans are subject to credit approval and underwriting guidelines. Additional restrictions may apply.
You should carefully read this disclosure; the promissory note, deed of trust or mortgage; any riders; and all other documents that you will be asked to sign if you accept an ARM loan.
ADJUSTABLE RATE MORTGAGE MEANS YOUR PAYMENT MAY CHANGE IN THE FUTURE. You are applying for an Adjustable Rate Mortgage (ARM) loan. This means that your interest rate and monthly payments may change during the life of your loan. Your monthly payments will increase if the interest rate rises and decrease if it falls. The date or dates on which changes can occur (referred to in this disclosure as “Change Date”) will be specified in the ARM loan documents. This ARM is based on the terms and conditions set forth in this disclosure and in the loan documents. We have based this disclosure on recent interest rates, index and margin values, discounts, and fees. Ask us for our current interest rate and margin.
An ARM is different from a fixed-rate mortgage loan. For a fixed-rate loan, the monthly payments of principal and interest do not change during the life of the loan. You should consider carefully which type of loan is best for you.
HOW YOUR INTEREST RATE IS DETERMINED. Your interest rate will be determined by means of an index that may change from time to time.
The Index. The interest rate change on this ARM will be based on an interest rate index (referred to in this disclosure as the “Index.”) The Index is the weekly average yield on the 1-Year US Treasury Constant Maturity (UST1YW). Information about the index is available in the Federal Reserve Statistical Release H-15 (www.federalreserve.gov/releases/h15).
Interest Rate. Your interest rate is based on the Index value plus a margin, rounded to the nearest 0.125 percent. A change in the Index generally will result in a change in the interest rate. The amount that your interest rate may change also may be affected by the periodic interest rate change limitations and the lifetime interest rate limits, as discussed below.
Initial Interest Rate Discount. Your initial interest rate will be discounted and will not be based on the Index used to make later adjustments. You should note, however, that because your initial interest rate will be discounted, your interest rate may increase on the first Change Date even if the Index remains the same or decreases. Ask us for the amount our adjustable rate mortgages are currently discounted.
Interest Rate Adjustments
Your interest rate under this ARM can change yearly after the initial rate change. See below for additional information pertaining to the ARM terms offered.
Your interest rate cannot increase or decrease more than 2.000 percentage points at first adjustment and 2.000 percentage points per subsequent adjustment from the initial interest rate excluding any buydown.
Your interest rate will never be greater than 6.000 percentage points above the Initial Discount Rate or lower than 3.000%.
Interest Rate Change Date for 7/1 ARM Program – Your interest rate will not change for the first 84 months (7 years) of the loan. The interest rate may change every year after the 7th year.
HOW YOUR PAYMENTS ARE DETERMINED. Your initial monthly payment of principal and interest will be determined based on the interest rate, loan term, and balance when your loan is closed. Your payment will be set to amortize the loan over a period of 360 payments.
Frequency of Payment Changes. Based on increases or decreases in the Index, payment amounts under this ARM loan can change at the first change date and every 12 months thereafter. However, your monthly payment amount could change more frequently if there is a change in the taxes, assessments, insurance premiums, or other charges required to be made into an escrow or impound account.
Payment Change for 7/1 ARM – Based on increases or decreases in the Index, payment amounts under this ARM loan can change after 84 month(s) and every 12 months thereafter.
Limitations on Interest Rate Payment Changes. Your interest rate will not increase or decrease on the first change date by more than 2.000 percentage points from the initial interest rate excluding any buydown. After the initial adjustment period, your interest rate will not increase or decrease by more than 2.000 percentage points per year. Your interest rate cannot increase more than 6.000 percentage points above the initial interest rate (excluding any buydown) over the life of the loan.
Adjustment Notices. You will be notified at least 210, but no more than 240, days before the first payment at the adjusted level is due after the initial interest rate adjustment of the loan. This notice will contain information about the adjustment, including the interest rate, payment amount, and loan balance. You will also be notified at least 60, but no more than 120, days before the first payment at the adjusted level is due after any interest rate adjustments resulting in a corresponding payment change. This notice will contain information about the adjustment, including the interest rate payment amount, and loan balance.
HOW YOUR PAYMENT CAN CHANGE (“Worst Case Scenario”). Your monthly payment can increase or decrease substantially based on changes in the interest rate.
Example 7/1 ARM Program Primary Home
Loan Amount $10,000.00
Loan Term 30 Years
Initial Interest Rate 6.125%
Margin 3.000%
Index 3.680%
Rounding 0.125%
Change Cap 2.000%
Life Cap 6.000%
Maximum Interest Rate 12.125%
Minimum Interest Rate 3.00%
Your monthly payment can change after 84 month(s) and every 12 months thereafter based on changes in the loan term, interest rate, or loan balance. For example, on a $10,000 loan with a 360 month term and an initial discounted rate of 6.125%, in effect as of September 2026, based on a margin of 3.00% and index of 3.680% rounded to the nearest 0.125%, the maximum amount that the interest rate can rise under this ARM program is 6.000 percentage points above the initial interest rate to 12.125%, and the payment can rise from a first-year payment of $60.76 to a maximum of $95.82 in the 10th year.
To see what your payment would be, divide your mortgage amount by $10,000, then multiply the monthly payment by that amount. For example, the monthly payment for a new loan amount of $60,000 would be $60,000 divided by $10,000 = 6. Multiply the payment amount by this number, e.g., 6 x $60.76 = $364.56 per month.
The above example of payments based on $10,000 loan amount fixed for 30 years at an initial margin and index in effect September 2026. Your margin and index may be different, as changes in the rate may increase or decrease substantially. The current margin value and index will be provided to you within three business days from date we receive your application.
PREPAYMENT. You may pay this ARM loan in whole or part without penalty at any time. If you are paying more than your regularly scheduled payment, you must notify us as to how you want the funds applied.
DEMAND FEATURE. This loan does not include a demand feature.