Allen Markel, REALTOR® · Texas Premier Realty

Buying

5/1 and 7/1 ARM

Year-by-year payments after the fixed period, the worst case at the cap, and the 30-year fixed beside it.

ARMs usually start about 0.5 under the 30-year fixed (6.69%).

What you expect rates to do. +1.00 is the cautious default; negative means falling rates.

5/1 ARM vs. the 30-year fixed

$2,141 /mo for 5 years

30-year fixed at 6.69% (P&I)
$2,256/mo
ARM edge during the fixed years
$115/mo
Worst case — capped at 11.19% (year 30)
$3,188/mo
Paid over 5 years: ARM · fixed
$128,482 · $135,369
Paid over 7 years: ARM · fixed
$187,308 · $189,517
Paid over 10 years: ARM · fixed
$294,457 · $270,738

For the first 5 years the rate cannot move — the note fixes it. After that it adjusts once a year, moving up or down by up to 1% from the previous year’s rate, not from the start. The cap notation 5/1/5 means “fixed 5 years, annual adjustment, 5% lifetime ceiling above the start rate.” At every change the payment is re-amortized: recomputed on what you still owe over the months left. The totals above follow your “change per year” guess; the worst case assumes the maximum rise every year, clamped to the 11.19% ceiling.

We’re not a lender. Real ARMs price off an index (SOFR) plus a margin, with a first-adjustment cap that can differ from later ones and a floor set by the note; the caps here are the common sets, not a quote. An ARM makes sense when you will sell or refinance inside the fixed period — plan for the worst-case payment anyway.

Year by year for the first 10 years on a $350,000 5/1 ARM starting at 6.19%. Years 1–5 are fixed by the note. From year 6 each row shows the lowest and highest the rate can be that year (moving 1% a year, 5% lifetime cap each way). Payment is principal & interest; balance follows the high path.
YearRatelowest – highestPayment / molowest – highestBalance at year endhigh path
1 (fixed)6.19%$2,141$345,852
2 (fixed)6.19%$2,141$341,440
3 (fixed)6.19%$2,141$336,747
4 (fixed)6.19%$2,141$331,755
5 (fixed)6.19%$2,141$326,446
65.19% – 7.19%$1,945 – $2,347$321,596
74.19% – 8.19%$1,763 – $2,555$317,106
83.19% – 9.19%$1,597 – $2,765$312,891
92.19% – 10.19%$1,446 – $2,976$308,875
101.19% – 11.19%$1,309 – $3,188$304,992

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These are the lenders Allen works with. For any lender you’d like to talk to, tap Make introduction — we’ll make the introduction for you.

Allen Markel is a licensed Texas REALTOR®, not a mortgage lender or loan originator. He does not quote rates or terms and does not decide whether you qualify — only a lender can do that. Introductions are a courtesy; you choose who to work with.

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