5/1 ARM

An adjustable-rate mortgage (aka ARM) is typically a 30-year home loan with an interest rate that changes often during the term length. You may notice two numbers before some of the common ARM loan types. The first number stands for how long the fixed rate will last for. The second number indicates how often your rate can change per year once the fixed rate period has passed. If you take out a 5/1 ARM, you’ll pay a fixed interest rate for the first 5 years of your loan and then begin paying an adjustable rate for up to 25 years. The adjustable rate may be higher or lower depending on the index rate.