5/1 Mortgage Rates
5/1 mortgage rates are at record lows these days. This past week, 5/1 mortgage rates averaged 4.85 percent, with an average 0.6 point, ( you pay points to buy down the mortgage rate) down from last week when it averaged 4.88 percent. A year ago, the 5/1 mortgage rates averaged 5.68 percent. With a 5/1 adjustable rate mortgage (ARM) the interest rate is fixed for the first 5 years then the rate adjusts every year after
Monthly payments on 5/1 adjustable rate mortgages may be less expensive initially but can increase substantially over the life of the mortgage. Many ARMs, including 5/1 ARMs have teaser rates which are relatively short initial fixed-rate periods, usually months or sometime up to a year. The teaser rate payment is so low some borrowers believe they can afford more house than they really can. After the low teaser rate period has ended, monthly mortgage payments can increase substantially, making the ARM unaffordable.
5/1 mortgage rates are so low right now because the economy is in a recession and the government as been lowering interest rates to stimulate demand for homes. Right now jumbo 5/1 adjustable rate mortgages are averaging around 4.5 percent. 30 year fixed rate jumbo mortgages are averaging around 6.25 percent. Almost two percentage points higher. If you're in the market for a jumbo loan you might want to consider getting an adjustable rate mortgage and refinancing to a fixed rate mortgage at a later time when rates are lower.
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