Should I do a 7 or 10-year ARM?

Shorter fixed-rate period: While 7 years might seem like a long amount of time, some borrowers may appreciate a bigger fixed-rate period. 10-year ARMs can give home buyers an extra 3 years of steady monthly payments that a 7/6 ARM can’t offer.

Is a 10-year ARM worth it?

A 10/1 ARM makes the most sense if you plan to sell your home or refinance your mortgage before the 10-year fixed period ends. If you do this, you can take advantage of the low initial interest rate that comes with an ARM without worrying about your rate rising once the fixed period ends.

Is a 7-year ARM a good idea?

When to consider a 7/1 ARM A 7/1 ARM is a good option if you intend to live in your new house for less than seven years or plan to refinance your home within the same timeframe. An ARM tends to have lower initial rates than a fixed-rate loan, so you can take advantage of the lower payment for the introductory period.

How much does a 7 1 ARM increase?

A 7/1 ARM with a 5/2/5 cap structure means that for the first seven years the rate is unchanged, but on the eighth year your rate can increase by a maximum of 5 percentage points (the first “5”) above the initial interest rate.

How often do ARM loans adjust?

With most ARMs, the interest rate and monthly payment change every month, quarter, year, 3 years, or 5 years. The period between rate changes is called the adjustment period.

Can you pay off an ARM early?

A 5-year adjustable-rate mortgage (5/1 ARM) can be paid off early, however, there may be a pre-payment penalty. A pre-payment penalty requires additional interest owing on the mortgage.

What are 7 year ARM rates?

Today’s 7/1 ARM loan rates