How does a 5 year adjustable rate mortgage work?

A 5 year adjustable rate mortgage is a popular choice for home buyers. Many home buyers feel 5 years is a long enough term, and they will either move or refinance before it adjusts. The interest rate will be fixed for the first 5 years of the mortgage, and then it can adjust. This means that, depending on market interest rates when it adjusts, it can move either up or down and change your monthly payment. It is important to know how much it can increase and how many times it can increase during the life of the loan.

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