Question 1

How much lower are ARM rates than fixed in Chico?

Accepted Answer

Rates vary by borrower profile and market conditions. Expect 0.50-1.00% savings during initial fixed period, more on jumbo loans.

Question 2

What happens when my ARM adjusts after the fixed period?

Accepted Answer

Your rate resets based on current index plus margin. Annual and lifetime caps limit increases, typically 2% per year and 5-6% total.

Question 3

Can I refinance an ARM before it adjusts?

Accepted Answer

Yes, most Chico ARM borrowers refinance during the fixed period. Plan for closing costs around 2-3% of remaining balance.

Question 4

Do ARMs make sense for Chico investment properties?

Accepted Answer

ARMs work when holding period matches fixed term. Rental cash flow should cover worst-case adjusted payment per lender stress test.

Question 5

Which ARM term works best for first-time buyers in Butte County?

Accepted Answer

7/1 ARMs suit buyers expecting life changes before adjustment. 5/1 terms rarely save enough versus fixed rates to justify adjustment risk.

Adjustable Rate Mortgages in Chico: Lower Start Rates, Smart Exit Strategies