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5 1 Arm Loan | Adjustable Rate Mortgage



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hello and thank you for watching this

quick video tutorial brought to you

today by lo VA rates we are speaking

about the five one-arm loan also known

as the five one adjustable rate mortgage

some refer to it as the five one hybrid

we're gonna go into all of that so that

you can better understand it okay so

number one what is an arm well of course

it is not this okay an arm loan simply

put is an adjustable there's your a rate

there's your our mortgage so we're not

talking about the arm that we all have

we're talking about an adjustable rate

mortgage now adjustable means the

interest rate can change they can go up

it can go down certainly can't go

sideways but it can go up and down

normally my arm loan starts with a lower

rate and they lower payment the lower

the rate the lower the payment then a

fixed rate mortgage so for example today

is November 2nd 2016 if you were to go

and buy a new home today and you

negotiated an interest rate on that

mortgage if you took an adjustable rate

mortgage whether that was a one-year arm

three-year arm five-year arm you would

almost certainly be offered a lower rate

on the arm than you would on the fixed

so let's speak specifically about the

five one arm because that's what this

video is about a 5-1 arm has a rate that

is fixed for the first five years so

just like a 30-year fixed you are fixed

for five years no matter what happens

your rate is not going to change now not

only is the rate not going to change

neither will the payment nothing changes

in the first five years of your mortgage

now I mentioned on the prior slide this

is also known as a hybrid load I like to

explain hybrid like this we've all heard

of hybrid cars what makes a car a hybrid

well it runs on gasoline and generally

speaking some sort of other fuel source

it could be natural gas

it could be electricity

it could be hydrogen you name it I've

even seen cars that have portions of

their fuel coming from the Sun now when

you take two things and combine them and

that the outcome is generally better

then that's how I explain a hybrid so

you've taken fixed rate benefits and

adjustable rate benefits and you've

combined them into one and you have

yourself a hybrid load okay now these

hybrid loans also aren't just fixed for

one or for the first five years on the

five one arm but they can generally also

your interest rate can only adjust one

time per year after that fixed term is

up so after year five your interest rate

just doesn't go up every other day or

every other week or even every other

month but generally speaking it can only

adjust one time per year after the first

five years so let's talk about the good

and the bad or as we like to call it the

pros and cons I'm gonna start with the

pros of the five one arm you get a lower

interest rate and lower payments than

you would if you were to get a 30-year

fixed

we've already talked about that that's

the main reason people go with an

armlock lower rate lower payments you

also have the benefit of knowing what

your payment's gonna be for a defined

period of time on the five one arm if

you were to buy a home today you're

gonna have the exact same rate until the

year

let's see 2021 do they get that right

2016 test my math at five years you're

gonna have the benefit instability of a

fixed-rate for a predefined period of

time that would be five years now this

is great for people who plan on moving

sometime in the next five years why

would you go take a higher rate simply

to get a 30-year fixed mortgage if you

know by the time your second child turns

3 or 4 your going to be moving or you

plan on transferring because you're in

the armed services there's a lot of

people that have no intention of ever

staying in their mortgage for more than

a handful of years these loans the 5/1

arm loan to be exact is a great option

for someone that plans on moving now

talk about some of the cons I have an

arm on my home I have loved arms figure

so it's really difficult for me to even

call these cons or you know risks but

let's talk about the ones that generally

people think about number one your

payment and your rate can change after

year five on a 5-1 hybrid your rate

might go down it might go up but the

fact of the matter is it can change and

that could be perceived as a con or a

negative portion or part of the arm also

there is some uncertainty as I just

explained you don't know if rates are

gonna go up for the next ten years

straight they've been going down

relatively speaking if you looked at an

interest rate chart since the year 2001

interest rates have been on a downtrend

that means though they bounced up and

down like my mouse here they've been

going down what happens if they were

doing this well there could be some

uncertainty it's not as simple simply

put pun intended a 30-year fixed rate is

very simple you buy your home you get

your rate you get your payment and you

know it's pretty simple to follow along

an arm right could be perceived as a bit

more difficult now VA as you know low va

rates we specifically focus our

attention on Veterans but we do

conventional we do FHA we do USDA

believe every type of loan Under the Sun

if you haven't served in the military

and you're just a civilian you can still

take advantage of FHA loans these are

not just for first-time homeowners or

for certain demographics of the country

everyone can take advantage of an FHA

loan so I want to focus quickly here at

the end the VA and FHA 5/1 arm are my

favorite and here's why they have less

movement or ball until it volatility

than your conventional arm loans we can

get into other videos and other

trainings at other times if you go to

our YouTube station for lo VA rates or

give us a call we can go into more

detail just know that there is less

volatility in these government endorsed

arms as there are conventional okay-y

there's also caps there's like ceilings

there's floor

there are things to keep your interest

rate from skyrocketing during

hyperinflation they cap via nfha cap

your interest rate movements every year

it can only happen one time a year

it can only go up one percent a year and

it can never go up more than five

percent from where you started

these are taps that have to do with VA

and FHA five one arms the index I talked

about the volatility and how much safer

these arms are than some others

well the index that these arms are tied

to are ver it's a very very safe index

and that helps add to this stability and

lastly I have seen on daily rate sheets

and we work with many many many lenders

and investors across the nation your VA

and FHA arm rates are generally speaking

much lower than your conventional rates

would be for an arm product on that same

day so you know what look at the arm

loan it's a great loan thanks for

researching give us a call at eight six

six five six nine eight two seven two or

check us out online at lo VA rates

dot-com