what is a 5/1 ARM mortgage loan?

4 Answers

  • 10 years ago
    Best Answer

    HI Jennifer U,

    In a 5/1 ARM interest rates are fixed for a period of five years. After the fixed rate period, your interest rate can adjust up or down depending on market conditions and what the interest rates are doing. It's a gamble, but one that can save you quite a bit of money in the short term.

    It's good to know that rate adjustments are capped at 5% above your initial rate and 2% per adjustment period. In simple terms, it means if your ARM rate is 3.99%, your rate will never be higher than 8.99% and will never rise more than 2% per year.

    Hope that helped. I’ve included some links below with some mortgage info that you might find useful.

  • 10 years ago

    A market, related to several profitable or even residential properties, a slight increase in prices of the property doesn't correspond to average income of a set of people who are interested to purchase it in particular. How many cases have you seen wherein people run short of money to meet the down payment charges?


    I have heard of quite a few mortgage companies who'd like the applicants to disburse a smaller amount as a down payment at least 5% of the total cost, plus the closing cost charges. Still it is not a pragmatic hope and thus several property buyers pick out no money down mortgage loan since the companies I've heard of are barely visible prominently.

  • 10 years ago

    The interest rate is fixed for the first 5 years and then adjusts every year after that (up or down).

  • 10 years ago

    5 year fixed, 1 year adjusted.

    Pretty bad bet right now...

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