5/1 jumbo interest-only ARM
5/1 jumbo interest-only ARM
A 5/1 jumbo interest-only ARM (adjustable-rate mortgage) has several defining characteristics. The term "jumbo" means the loan amount exceeds the maximum that Fannie Mae and Freddie Mac can purchase or guarantee. The term "5/1" means that the interest rate stays the same for the first five years, after which time the rate is adjusted once annually. As an "interest-only" mortgage, the payments during the first five years do not reduce the principal balance.
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