How a 5-Year ARM Loan Works Bankrate.com provides FREE adjustable rate mortgage calculators and other ARM loan calculator tools to help consumers learn more about their mortgages.

A 5/1 arm (adjustable rate mortgage) combines elements of a fixed rate loan and an ARM, so let’s recap those two loans first. Fixed Rate Loan – A loan where the interest rate will stay the same during the life of the loan.

One common adjustable-rate mortgage is known as a 5/1 ARM. It has an initial fixed rate for five years before the interest rate starts adjusting. The rate can change every year for the remaining life of the loan.

How To Apply For Fha How to get an FHA loan. Check your credit history. Make sure it is accurate and see if there are any problems you can clear up before applying for a loan. Start saving for a down payment. FHA loans only require a down payment of 3.5 percent, though if you can afford a larger one it will lower your long-term costs.

A 5/1 adjustable-rate mortgage, or ARM, is a mortgage loan that has a fixed rate for the first five years, and then switches to an adjustable-rate mortgage for the remainder of its term. Once a year after that initial five-year period, the interest rate can be adjusted up or down, depending on a number of factors.

Current 5-year hybrid arm rates. The following table shows the rates for ARM loans which reset after the fifth year. If no results are shown or you would like to compare the rates against other introductory periods you can use the products menu to select rates on loans that reset after 1, 3, 7 or 10 years.

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An adjustable rate mortgage, called an ARM for short, is a mortgage with an interest rate that is linked to an economic index. The interest rate and your payments are periodically adjusted up or down as the index changes.

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If you plan to keep your home (and your mortgage) for just a few years, the 5/1 ARM may be a smarter choice. Its interest rate can be slightly lower than that of the 15-year loan.

And you should always prepare for a higher interest rate adjustment if you’ve got an ARM. In fact, during the loan application process mortgage lenders typically qualify you at a higher expected rate to ensure you can make more expensive mortgage payments in the future should your ARM adjust higher.

These are not marketing rates, or a weekly survey. The rate for a 15-year fixed home loan is currently 2.89 percent, and the rate for a 5-1 adjustable-rate mortgage (ARM) is 2.91 percent. Below are.

These are not marketing rates, or a weekly survey. The rate for a 15-year fixed home loan is currently 2.96 percent, and the rate for a 5-1 adjustable-rate mortgage (ARM) is 2.95 percent. Below are.