# What is the difference between a 5'1 and 30 year ARM?

**30**-

**year fixed**-rate

**mortgage**is the U.S. industry-standard

**mortgage**product, and has been for some time. And it's pretty easy to understand why: The interest rate stays the same for the entire term of the loan. On the other hand,

**with a 5/1 ARM**, your initial interest rate will be

**fixed**for a period of five years.

Click to see full answer

People also ask, is a 5'1 arm a good idea?

A **5/1 ARM** can work out in your favor under the right conditions. Here's when a **5/1 ARM** might be a **good idea**. The advantage of a **5/1 ARM** is that during the first phase, you get a much lower interest rate and payment. If you plan to sell in less than six or seven years, a **5/1 ARM** could be a smart choice.

Subsequently, question is, what is a 30 year ARM? Put simply, the 5/**1 ARM** is an adjustable-rate mortgage with a **30**-**year** loan term that's fixed for the first five years and adjustable for the remaining 25 years. So during years one through five, the interest rate never changes.

Likewise, people ask, what is a 5'1 arm 30 year term rate?

Basically, an **ARM** is a mortgage loan that has an **interest rate** that adjusts, or changes, usually once a **year**. Instead, the **interest rate** on a 5 **year ARM** is fixed for the first five **years of** the loan. After five years, the **interest rate** can change annually for the next 25 years until the loan is paid off.

What is a 5'1 Adjustable Rate Mortgage?

A **5/1 adjustable rate mortgage** (**5/1 ARM**) is an **adjustable**-**rate mortgage** (**ARM**) with an interest **rate** that is initially fixed for five years then adjusts each year. The “5” refers to the number of initial years with a fixed **rate**, and the “1” refers to how often the **rate** adjusts after the initial period.