5/1 ARM6 of 10What is it? The 5/1 ARM is an adjustable-rate mortgage that has a fixed rate for five years. After that time period, the rate adjusts periodically. The term for these loans is typically 30 years. Like the 1-year ARM, borrowing costs are tied to a mortgage index such as Libor, or London Interbank Offered Rate, and COFI, or 11th District Cost of Funds. Buyers benefit from lower borrowing costs when interest rates fall, but feel the pain of higher payments when rates rise.Who is it good for? Buyers who intend to sell within five years and are looking to cut down on their mortgage costs. Also, borrowers with enough cushion in their income to cover higher payments should rates increase.Search for the best rate on a 1-year adjustable-rate mortgage.Learn more about fixed-rate mortgages.Should you go with a fixed-rate mortgage or an ARM?Find the latest mortgage index rates.<< Back to the 2010 Real Estate Guide table of contents. Related Articles:Fixed-rate mortgagesAdjustable-rate mortgagesOther types of mortgagesARM or fixed-rate mortgage?Related Links:How much house can you buy?Which lender is right for you?Private mortgage insurance10 questions to ask your lenderadvertisement
What is it? The 5/1 ARM is an adjustable-rate mortgage that has a fixed rate for five years. After that time period, the rate adjusts periodically. The term for these loans is typically 30 years. Like the 1-year ARM, borrowing costs are tied to a mortgage index such as Libor, or London Interbank Offered Rate, and COFI, or 11th District Cost of Funds. Buyers benefit from lower borrowing costs when interest rates fall, but feel the pain of higher payments when rates rise.
Who is it good for? Buyers who intend to sell within five years and are looking to cut down on their mortgage costs. Also, borrowers with enough cushion in their income to cover higher payments should rates increase.
Find the latest mortgage index rates.
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