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5/1 ARM

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5/1 Adjustable Rate Mortgage

This is an Adjustable Rate Mortgage; however, it’s different than a typical ARM in that your Annual Percentage Rate will stay the same for the first 5 years of the loan versus changing every year. After 5 years, the rate can adjust annually, depending on the market. Compared to a Fixed Rate home loan or a 5/5 ARM, the 5/1 ARM offers a lower APR initially, which can increase your buying power.

Best Choice If:

  • The loan amount you are looking to finance is under $484,351.
  • You are looking for a home loan that does not require 20% down.
  • You are looking to enhance your buying power, and you want to take advantage of a lower initial rate versus a Fixed Rate loan, but at the same time, want to know your rate will be stable at the beginning of your loan. With a 5/1 ARM, your APR will stay the same for the first 5 years and then adjust every year on the anniversary date of the loan. If you want to finance with an ARM, but desire more predictability with payments over the long-term, you may want to consider the 5/5 ARM; with this product, the APR  changes every 5 years.
  • You want to keep your APR, which affects monthly payments, as low as possible at the beginning of your loan. Rates for a 5/1 ARM will typically be lower than a 5/5 ARM.

Other Features:

  • Rate caps = up to 2% over your start rate at initial rate change and 2% per adjustment thereafter and 5% over the lifetime of the loan. A rate cap is a limit on how much the rate can change at the end of each adjustment period over the life of the loan.
  • Index = 1 Year LIBOR
  • Margin = 2.250%
  • Fixed rate conversion option may be available on the 1st, 2nd and 3rd adjustable dates only.

An example APR for a 5/1 Year ARM loan is 4.884%. An example monthly mortgage payment of principal and interest is $492. The example quotes are based on a property value of $200,000 and a loan amount of $100,000. The Annual Percentage Rates (APR) stated is an estimate and is intended for informational use only. Your actual APR may vary based on your actual loan amount. Please speak with a Loan Executive for additional information about our rates and fees. Rates are subject to change without notice. Your actual rate and/or points may be different, as many factors are evaluated for a loan approval. This product is subject to change or cancellation at any time without prior notice.

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