Fixed Rate One Year Adjustable

Is it possible to get the benefits of a fixed rate mortgage and an adjustable rate mortgage? Some think so with fixed rate one year adjustable loans. Also often called 5/1 loans, these loans give you less volatility than a traditional adjustable mortgage. They work by giving you fixed rates and payments throughout the year. They then reset the interest rate and monthly payment amount at the end of each year. This “once a year” change is marketed as a benefit, but it is really a red herring for the most part. The loan really doesn’t offer much more stability than found with an adjustable rate mortgage as adjustable mortgages usually only resent a couple times a year.

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