5/1 Adjustable Rate Mortgage


A 5/1 ARM (adjustable rate mortgage) has a fixed monthly payment and interest rate for the first 60 months of the loan. This type of loan is amortized over a 30 year period. The 5/1 ARM interest rate is calculated using an economic index and a margin (the margin is fixed for the entire term of the loan). Many different economic indexes are used by lenders, so you will want to discuss the index tied to your loan with an Alerio representative. The remaining 25 years of the loan, following the initial fixed period, will adjust annually according to the index. A 5/1 ARM is a great loan for debt consolidation because it offers a low interest rate and can save you money monthly by consolidating high interest accounts with your mortgage.