Adjustable Rate Loans (3/1, 5/1, 7/1, 10/1)

This 30-year loan offers a fixed interest rate for the first 3 years and then turns into a 1 Year Adjustable Rate Mortgage for the remaining 27 years of the loan. This loan has recently become quite popular by those seeking to minimize monthly payments while accepting a certain amount of risk.

This loan may be right for you if you wish to maximize the amount of loan you qualify for and expect to remain in this home for more than 3 years. This loan is generally the least expensive way to fix your monthly payment for the first three years of your loan. After that, this loan is like a 1 Year ARM with all of its risks and rewards. This loan may not be right for you if you are concerned that your income in three years may not cover your monthly payment after your first adjustment.

5/1 Adjustable Rate Mortgage

This 30-year loan offers a fixed interest rate for the first 5 years and then turns into a 1 Year Adjustable Rate Mortgage for the remaining 25 years of the loan. This loan has a longer initial fixed period than the 3/1 Adjustable.

This loan may be for you if you fit the profile for the 3/1 Adjustable Mortgage but wish to trade off a higher initial rate for the security of a longer initial fixed period. If you are certain you will only remain in this home for less than the initial 5 years, consider the 5/25 Balloon Mortgage instead.

7/1 Adjustable Rate Mortgage

This 30-year loan offers a fixed interest rate for the first 7 years and then turns into a 1 Year Adjustable Rate Mortgage for the remaining 23 years of the loan.

This loan could be right for you if you plan to remain in this home at least the initial seven years but consider it likely that you may wish to remain longer. If you are certain you will only remain in this home for less than the initial seven years, consider the 7/23 Balloon Mortgage instead.

10/1 Adjustable Rate Mortgage

This 30-year loan offers a fixed interest rate for the first 10 years and then turns into a 1-Year Adjustable Rate Mortgage for the remaining 20 years of the loan.

This loan may be right for you if you plan to remain in this home at least the initial ten years, but consider it likely that you may wish to remain longer. Consider this loan if you wish to have a long period of fixed monthly payments, but still wish to enjoy some savings over the 30-Year Fixed Rate Mortgage.