Best 5 Year Mortgage Rates

About the bank lenders

Standard Bank: Headquartered in Monroeville, Pennsylvania, it enjoys an A+ rating from the Better Business Bureau.

Third Federal Savings and Loan: Headquartered in Cleveland, it has an A+ rating from the Better Business Bureau. Third Federal also offers a lowest-rate guarantee: It will beat the lowest advertised rate on a comparable loan or pay you $1, 000.

People's United Bank: People's is headquartered in Bridgeport, Connecticut, and has an A+ rating from the Better Business Bureau.

Reliance Bank: Headquartered in St. Louis with branches throughout the city, plus two in Florida, it enjoys an A+ rating from the Better Business Bureau.

BMO Harris Bank: Headquartered in Chicago, it also has an A+ rating from the Better Business Bureau.

Raymond James Bank: You might be familiar with this company for its financial planning services, but it also offers a full range of lending and banking services. It is headquartered in St. Petersburg, Florida.

Credit Unions: Top 5-year ARM rates

While several larger banks are offering great rates on ARMs, it's worth checking at credit unions and local institutions as well. You may find a better deal. Here are some of the best 5/1 adjustable-rate mortgages credit unions are offering.

About the credit union lenders

Teachers Federal Credit Union: Based in Farmingville, New York, and unrated by the Better Business Bureau. Membership is open to borrowers who live, work (or regularly conduct business), worship or attend school in Nassau County, New York, and some parts of Suffolk County, New York. You can apply in person or online.

American Airlines Federal Credit Union: Has an A+ rating from the Better Business Bureau and is headquartered in Fort Worth, Texas. Membership is open to anyone working in the air transportation industry and their families. A $1 membership fee and $5 share deposit are required.

Star One Credit Union: Has an A+ rating from the Better Business Bureau and is headquartered in Sunnyvale, California. Membership is available to individuals in Santa Clara County, employees of corporate sponsors and their immediate family members. There are no membership fees, but you must maintain a $50 balance in your credit union savings account.

LGE Community Credit Union: Has an A+ rating from the Better Business Bureau and is headquartered in Marietta, Georgia. This small institution has just 100, 000 members and 200 employees. Membership is open to all residents and businesses of Cobb, Cherokee, Paulding and Fulton counties, along with over 350 companies in various counties that partner with the credit union. There is no fee to open an account, only a $5 share deposit requirement.

Finding the best mortgage rates

Even if you don't live in the areas served by these banks and credit unions, their low rates and fees provide a great blueprint to follow. Find a deal like these in your neck of the woods, and you'll know you've found a great one.

Get started by searching Bankrate's database for the from scores of other lenders in your area.

What you'll pay

The biggest benefit to adjustable-rate mortgages is that the initial monthly payments are lower than what you’d get with a fixed-rate loan.

For a 5-year ARM with an introductory rate of 2.125%, the lowest rate listed above, the principal and interest payment would be just $376 a month for every $100, 000 borrowed, or $752 on a $200, 000 loan.

With a rate of 2.75%, the highest rate among the lenders featured here, your principal and interest payment would be $408 a month for every $100, 000 borrowed, or $816 on a $200, 000 loan.

You can use our to determine the monthly payment for the exact amount you want to borrow with this or any home loan.

It will also provide a month-by-month amortization schedule that shows how much you've reduced your debt and how much you still owe if you want to pay off the loan.

ARMs are popular with borrowers who plan to sell or refinance before the introductory rate expires.

These loans can allow you to spend less on interest and have a lower monthly payment over the first few years before the rate resets.

There's a chance that you'll find lenders offering ARMs with lower rates, but it's important to check their interest rate caps before you sign up.

Rates on some of these loans can increase as much as five percentage points when they reset the first time.

Interest rate caps vary by lender, but a common structure is 2/2/6, which means the interest rate can't go up more than:

• 2 percentage points the first time it adjusts in five years.
• 2 percentage points each year after that.
• A total of 6 percentage points over the life of the loan.

Your loan may also have a rate floor of perhaps 2%, meaning that no matter how far interest rates drop, this is the lowest rate you could pay.

Although mortgage rates have defied all predictions and are the lowest we've seen this year, thanks to the Federal Reserve continuing to keep interest rates low and Great Britain's decision to exit the European Union.

But it's a pretty safe bet that rates will move higher, perhaps substantially higher, by the time this loan first adjusts in five years.

That means an initial 2.5% rate could hit 4.5% when it first adjusts after five years (not bad), 6.5% at the second adjustment and max out at 8.5%.

A loan with a low initial adjustment and modest ongoing adjustments might allow you to wait beyond the introductory period to sell or refinance.