They are not the same loan. Both loans the 5/1 ARM and 5year Balloon are based on a 30 year amortization or (repayment schedule) to get the monthly payment. These are the obvious differences:
1) The 5 year Balloon means that on the scheduled 61st payment the whole outstanding principal balance is due.
2) The 5/1 ARM means that on the 61st payment the interest rate can adjust up or down to make your payment different than it was the month before. There are a variety of ARMs out there and each has different ways to calculate the adjustment and what factors into the adjustment (index and margin). Some examples are Monthly Treasury Average, LIBOR, etc. Some ARMs have higher margins than others and that is why it is best to talk with a lender near you. As a licensed loan originator I would be happy to explain the differences.
Both of these loans have fixed rate instruments for the first 60 months (5years).
Licensed Loan Originator
Amerifirst Financial, Inc.
1910 S. Stapley Drive #209
Mesa, AZ 85204
NMLS# 213777 AZ LO-0915068
Apply Online: http://www.mattpuzz.com