![]() ![]() With the 7/1 ARM, you get mortgage rate stability for a full seven years before even having to worry about the first rate adjustment.Īnd because most homeowners either sell or refinance before that time, it could prove to be a good choice for those looking for a discount. You probably don’t want your mortgage rate (and mortgage payment) to change all the time, especially if your rate increases, which is probably the likelier outcome. Meaning you may hold a fixed-rate mortgage for as long as you own your home or until you refinance.This loan type features a fixed interest rate for a full seven years.Relative to other fixed-rate mortgage options that might be available.You can obtain a lower interest rate (and monthly payment).If you prefer one over the other, shop accordingly to see which lenders offer the 7/1 ARM vs. Otherwise, you’ll need to contend with more adjustments, though it should be noted that rates can move both up and down. If you still have your ARM at that point, you can explore a refinance if rates are favorable. Then you’re subject to a rate adjustment every six months. You still get the seven years of fixed rate goodness, which is arguably the most important feature. The good news is it’s not all that different than the 7/1 ARM. So you may come across a “7/6 ARM,” which as the name implies is fixed for the first seven years and then adjusts twice each year (every six months) thereafter. Lately, more mortgage lenders have been pitching ARMs that adjust every six months instead of annually. And those 24 extra months might come in handy… You Might Also Come Across the 7/6 ARM It affords you two additional years of fixed payments when compared to the 5/1 ARM. A lower interest rate thanks to it being an ARM, and a long period where that rate won’t change. You essentially get the best of both worlds. This makes the 7-year ARM a so-called “hybrid” adjustable-rate mortgage, which is actually good news. ![]() That’s where the number “1” in 7/1 ARM comes in. So if the starting interest rate is 3%, that’s where it will remain until it’s first adjustment in month 85.įor all intents and purposes, the loan program offers borrowers fixed rates for a very lengthy 84 months.ĭuring the remaining 23 years, the rate is adjustable, and can change just once per year. During the first seven years of the loan term, the mortgage rate is fixed, meaning it won’t change from month-to-month, or even year-to-year. It’s an option to consider alongside the more popular 30-year fixedĪ 7/1 ARM is an adjustable-rate mortgage with a 30-year term that features a fixed interest rate for the first seven years and a variable rate for the remaining 23 years.Many borrowers don’t keep their mortgage/home that long so you may never actually face a rate adjustment.After that the rate becomes annually adjustable for the remaining 23 years of the 30-year loan term.You get a fixed interest rate for the first seven years of the loan. ![]()
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