Best Refinancing Rates for a 5/1 ARM Ending Soon
When the fixed period on a 5/1 adjustable-rate mortgage (ARM) ends, many homeowners experience uncertainty - and sometimes sticker shock. Your interest rate is about to change, your payment may rise, and the window to refinance at favorable terms can close quickly.
This guide explains how refinancing rates work when a 5/1 ARM is ending, how to compare your options, and how to decide whether switching to a fixed-rate loan or another ARM makes financial sense.
Quick Answer: What Should You Do If Your 5/1 ARM Is Ending Soon?
If your 5/1 ARM is approaching its first adjustment, the safest move is to evaluate refinancing options before the rate resets. Waiting until after the adjustment can limit choices and increase monthly costs.
- Check your adjustment date and current ARM terms.
- Estimate your new payment after the reset.
- Compare fixed-rate and ARM refinance options.
- Calculate break-even on closing costs.
- Lock a rate if the numbers work and payment risk is high.
Start by running scenarios in the refinance calculator and reviewing broader strategy in Refinancing & Equity.
How a 5/1 ARM Reset Works
A 5/1 ARM has a fixed interest rate for the first five years. After that, the rate adjusts once per year based on market conditions and your loan’s specific terms.
When the fixed period ends, your lender recalculates your interest rate and monthly payment. Even a small rate increase can significantly affect cash flow.
How Your New ARM Rate Is Calculated
After the reset, your ARM rate is typically calculated as:
Index + Margin = New Interest Rate
The index reflects broader market rates, while the margin is fixed in your loan agreement. This is why rates can rise quickly if market conditions change.
Rate Caps and Payment Shock
Most ARMs include caps that limit how much your rate can increase at each adjustment and over the life of the loan. While caps help, they don’t eliminate payment shock.
This is why many homeowners refinance into a fixed-rate loan before the first adjustment - predictability often outweighs chasing the lowest possible initial rate.
What the “Best” Refinancing Rate Really Means
The best refinancing rate isn’t always the lowest advertised number. It’s the option that minimizes total cost for how long you plan to keep the loan.
That’s why comparing APR, points, lender credits, and break-even timing matters. The refinance break-even calculator helps clarify this decision.
Refinancing Options When a 5/1 ARM Ends
- Fixed-rate refinance: Stability and predictable payments.
- New ARM (7/1 or 10/1): Lower initial rate with future adjustment risk.
- Keep the ARM: Only reasonable if payment remains affordable after stress-testing.
Compare scenarios with the ARM vs fixed calculator.
A Simple 90-Day Timeline Before Your ARM Resets
- 90 days out: check credit, gather documents, run scenarios.
- 60 days out: compare offers and calculate break-even.
- 30 days out: lock rate and finalize refinance.
Calculators That Make the Decision Easier
Refinancing a 5/1 ARM FAQs
When should I refinance a 5/1 ARM?
Ideally 60–90 days before the first adjustment, when options and leverage are strongest.
Is a fixed-rate refinance safer?
For many homeowners, yes - especially if long-term budgeting stability is the priority.
Ready to See Your Best Refinance Option?
Compare scenarios before your ARM resets and avoid costly surprises.