Why would I want a 5/1 ARM home mortgage loan
5/1 is a common Adjustable Rate Mortgage. If you get this mortgage, you will pay low, fixed rates for the first five years of your mortgage. After that, your interest rates will change yearly and according to the market. This is a good option if you are planning to refinance or sell after five years.
What can I use a 5/1 ARM home mortgage loan for, and what are my options
A 5/1 ARM home mortgage loan is a good option if you need initial low monthly payments. If you plan on paying off a student loan, doing major home repairs, or for one reason or another don’t have cash that you know you will have in five years, you could use this loan instead of waiting to buy a house. Some alternatives to the 5/1 ARM are the 1/1 ARM, 2/1 ARM, 7/1 ARM, and 10/1 ARM.
Why should I get a 5/1 ARM home mortgage loan
The initial fixed interest rate you will pay for a 5/1 ARM will be much lower than a Fixed Rate Mortgage. If your budget can handle fluctuating prices for the subsequent years of your mortgage, this may prove to be a good choice for you.
How can I get a 5/1 ARM home mortgage loan
We can help you get a 5/1 ARM home mortgage loan. Click here to find out more.
How can my FICO/Credit Score affect my mortgage rate
Your FICO and Credit Score are very important factors in determining your mortgage rate. If you score between 720 and 850, you are A-Paper; you have good credit. If you score below 660 you will have trouble finding a lender even though the official cutoff for Sub-Prime and Non-Prime lending is 620.
Q: What if the interest rates skyrocket after my initial fixed rate period is over?
A: You can always refinance your loan if the payments become too much for you.
Q: What kind of down payment do I need to have for a 5/1 ARM home mortgage loan?
A: It will differ depending on your lender, but expect to pay between 5% and 10% of your purchase price as a down payment.
Q: How long will I have to make payments after my first five years?
A: Most 5/1 ARMs are fully amortized (paid) in thirty years.
Q: Then what is the difference between a Thirty Year Fixed rate Mortgage and a 5/1 ARM?
A: In a 5/1 ARM only the first five years are fixed, and in a Thirty Year Fixed Rate Mortgage, all thirty years are fixed.
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