Follow Us Here:Mortgage Lenders Plus on Facebook
Mortgage Lenders, Home Mortgage Lender, Home Loan Lenders, Mortgage Lenders Plus.com! Mortgage Lender, Home Mortgage Lenders, Mortgage Lenders Plus.com!
 
Mortgage Application Mortgage News Mortgage Calculators Home Equity Loans Mortgage Loans

10/1 ARM

Adjustable rate mortgages (ARM) come in as many models today as automobiles do. There are differing increase caps, loan origination fees, interest rates and so on. The prevailing feature of an ARM is that it has an initial monthly payment based on a "starter" interest rate which is set at a low figure. After a designated period of time, the interest rate is increased based on a formula that includes an index and a margin. The standard initiation periods are 1,3,5,7 and ten years. A borrower can choose a loan that has a low frozen interest rate for any one of those periods, after which the interest rate is adjusted on a yearly basis. These loans are designated with a shorthand using numbers: 1/1; 3/1; 5/1; 7/1 and 10/1. The first number is the time in years that the initial interest rate will hold and the second figure is the frequency of interest rate adjustment (one year).

The longer the initial period on an ARM, the higher the initial interest rate will be. Because the 10/1 ARM has a third of the mortgage's life locked into the initial "teaser rate," that rate is not going to be a lot different than the prevailing rate on a fixed rate mortgage. In fact, a survey of three lending institutions showed the 30 year fixed rate and the 10/1 initial rate to be the same.

The value of a 10/1 ARM may be that people with less than prime credit ratings can qualify for the ARM but not for a thirty year fixed rate loan. The national average for American families staying in a home is nine to eleven years. For many borrowers the 10/1 will be the same as a fixed mortgage because they will be moving before the interest rates adjust. If a borrower wants to lower the interest rate further and is not planning to be in the home long there are choices such as the 7/1 which will likely be .08% to .10% lower than the thirty year fixed rate; and the 5/1 which comes in at a little less than a quarter of a percent lower.

A 10/1 ARM can function as a fixed rate loan for young families who expect to be moving as their family grows. While the interest rate is going to be minimally lower than the fixed rate, a 10/1 will probably be easier to qualify for. A 10/1 ARM may also have a higher proportion of interest included in the early payments than with a fixed rate mortgage. That provides a larger tax deduction, although the development of equity is slowed because the principal is not paid down as fast as with a more conventional loan.

Request Quote
View Privacy Policy
Mortgage Calculators

Fixed Rate vs. Interest Only
Mortgage Loan Payoff
Simple Mortgage Calculator
Mortgage Loan Comparison
Savings Goal Calculator

View mortgage calculators >>
Mortgage Tools & Help

Mortgage Identity Theft
Glossary of Mortgage Terms
Ask a Mortgage Lender
FREE Mortgage Quotes
Find a Real Estate Agent
Find a Real Estate Appraiser
Predatory Mortgage Lending
Basic Mortgage Checklist
Rates & Mortgage Calculator
updated Saturday, October 21, 2017

Mortgage Type Today Last Week Change
30 yr fixed 6.03 6.24   0.035%
15 yr fixed 5.47 5.72   0.046%
5/1 ARM 5.34 5.43   0.017%
3/1 ARM 5.48 5.42   0.011%
Your dream of home ownership, refinancing, or using your homes equity might
just be an application away. Simply fill out our short form and get quotes from
mortgage lenders near you!

Simple Payment Calculator
Loan Amount
Interest Rate
# of Years

Mo. payment
Total Interest
See more mortgage calculators
   
Mortgage Lender, Home Mortgage Lenders, Mortgage Application
Choose Your State's Mortgage Lender Guide
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
D.C.
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming

About | Contact | Webmasters | Sitemap | Feedback | Mortgage Help | Mortgage Loans |
Home Equity | Internet Mortgage Leads | Lender Login

Mortgage Lenders Plus.com is an advertiser supported mortgage lender directory. Copyright 2000 - 2017, Mortgage Lenders Plus.com. All rights reserved. Use of this website constitutes acceptance of our updated privacy and disclaimer policies.

Comodo SSL        Mortgage RSS