AgentMortgage

5/1 ARM stages comeback

Attractive rates for 20% downpayments

A year ago, 30-year fixed-rate financing was the name of the game. Recently, the adjustable-rate mortgage (ARM) made a comeback. The 5/1 ARM is popular with some homebuyers and homeowners with equity who are refinancing. The attraction of a 5/1 ARM is that it offers a fixed rate for five years that is significantly lower than what is available on 30-year fixed-rate mortgages. At the end of May, 5/1 ARMs were available from some lenders with interest rates as low as 3.75 percent with no points. Points refer to the loan origination fee: 1 point is equal to 1 percent of the mortgage amount.The interest rate on a 30-year fixed-rate loan was as low as 4.5 percent with 1 point. Interest rates vary from one location to the next, and not all mortgage products are available in every state. Last year, high-end buyers paid a premium for jumbo financing, if they could find it at all. At the end of May, some lenders offered 5/1 ARMs for 4.5 percent in amounts up to $1 million to borrower...