![]() If a loan is named a 5/1 ARM then what that means is the loan is fixed for the first 5 years & then the rate resets each year thereafter. It is the dual nature of these loans which leads to them being called a hybrid ARM. After the initial introductory period the loan shifts from acting like a fixed-rate mortgage to behaving like an adjustable-rate mortgage, where rates are allowed to float or reset each year. Most adjustable-rate mortgages have an introductory period where the rate of interest and monthly payments are fixed. Other Types of ARM Loans What is a Hybrid ARM? If it did happen, the calculations would get much more complex.
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