Mortgages Key Terms

Mortgages Key Terms

5/1 Adjustable Rate Mortgage A 5/1 adjustable rate mortgage (ARM) or 5-year ARM is a mortgage loan where “5” is the interest rate will adjust after the initial five-year period ends. The most common fixed periods carefully read the contract and ask questions if you’re considering an ARM. Learn more about how adjustable rates change (cfpb.gov/askcfpb/1949). Ability-to-repay rule The ability-to-repay rule is the reasonable and good faith determination most mortgage lenders are required to make that you are able to pay back the loan.