5 Year Adjustable Rate Mortgage

If you are looking for a way to significantly lower your monthly house payment, a 5 Year Adjustable Rate Mortgage may be exactly what you are in the market for. These types of loans are perfect for use when purchasing deeply discounted (or reduced value) properties that have become more and more common as a result of the housing crisis. These kinds of loans are attractive to buyers for a variety of reasons.

With a 5 Year Adjustable Rate Mortgage, the buyer is required to make their monthly loan payments at the prevailing interest rate, a rate that will not change for the first 5 years of the mortgage. There is a 7 year term mortgage available as well, but the longer the term of the loan the higher the interest rate generally is. These payments during the fixed period are interest only – meaning you are paying nothing toward the principal of your loan.

While this may seem like a risk to some, the 5 Year Adjustable Rate Mortgage is a blessing to those who desperately need to negotiate a lower mortgage payment for whatever reason, such as those on a fixed income. It can assist them in purchasing a more expensive home than they would have been able to afford utilizing a traditional mortgage.

A 5 Year Adjustable Rate Mortgage can also be useful if the buyer has no intentions of remaining in the property for more than a few years – why make a higher payment with a 30 year fixed rate loan if you are going to be cutting and running? Indeed, these types of loans can be just the thing for many people in a variety of situations.

There are certain requirements that must be met if you are trying to qualify for a 5 Year Adjustable Rate Mortgage, such as a debt to income ration no greater than 45%, credit card debt being eliminated, and auto loans being paid off. In addition, the lender will verify income, credit rating, and employment history as well.