what is a 5/1 ARM mortgage loan?
- Quicken LoansLv 510 years agoBest 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.Source(s): https://www.quickenloans.com/home-loans/adjustable... http://www.quickenloans.com/mortgage-news/should-y...
- 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.
- Wayne ZLv 710 years ago
The interest rate is fixed for the first 5 years and then adjusts every year after that (up or down).
- ScarfaceLv 510 years ago
5 year fixed, 1 year adjusted.
Pretty bad bet right now...