No reason to be afraid of an ARM, just make sure you understand the terms. If you plan to stay put for a long time it might not make sense but you still need to figure it out for your situation. The 5/5 is a little odd, most common seem to be 5/1.
I hedged and went with a 7yr ARM although I plan to move sooner. Biggest question I had were what is the basis for the rate, how frequently does it adjust and what is the max adjustment, each time and total.
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5/5 and 5/1 Adjustable Rate Mortgages
The 5/5 and the 5/1 adjustable rate mortgages are amongst the other types of ARMS in which the monthly payment and the interest rate does not change for 5 years. The beginning of the 6 th year is when every 5 years the interest rate is adjusted. That’s every year for the 5/1 ARM and every 5 years for the 5/5
Other types of adjustable rate mortgages include the 5/5 and 5/1 ARMs. With these types, the interest rate and monthly payment remain the same for 5 years.
Starting with the 6th year, the interest rate is adjusted every 5 years (for 5/5 ARM) and every year (for 5/1 ARM).
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