Loading
Lafayette's higher-priced homes make ARMs attractive for buyers who want lower initial payments without committing to 30-year fixed rates. Many buyers here upgrade within 7-10 years, making the adjustable period less of a concern.
ARMs typically start 0.5-1.5% below fixed rates, which translates to meaningful monthly savings on Lafayette's premium properties. That difference compounds when you're financing above conforming limits.
Lenders qualify ARMs using the fully-indexed rate, not the teaser rate. You need to afford the payment at the higher adjusted rate, which protects you from payment shock.
Minimum credit scores run 620-640 for most ARMs, but expect better terms at 700+. Down payment starts at 5% for conforming amounts, 10-20% for jumbo ARMs common in Lafayette.
Not all lenders price ARMs competitively. We see rate spreads of 0.75% between our best and worst ARM pricing on the same borrower profile.
Portfolio lenders often beat traditional banks on jumbo ARMs, especially for properties over $1.5M. Credit unions sometimes offer relationship pricing that shaves another 0.125-0.25% off rates.
Most Lafayette buyers choose 7/1 or 10/1 ARMs. The 5/1 ARM saves maybe $50-75 monthly but adds refinance risk if you stay longer than expected.
Match your ARM term to your realistic timeline. If there's a 30% chance you stay past 10 years, pay the extra for a fixed rate. Refinancing costs money and rates might be higher when your ARM adjusts.
ARMs beat fixed rates when you're confident about your timeline. Conventional fixed loans make sense if you plan to stay 15+ years or can't tolerate rate uncertainty.
Jumbo ARMs often undercut jumbo fixed rates by wider margins than conforming loans. On a $1.5M loan, that 1% rate difference saves you $1,250 monthly during the fixed period.
Lafayette buyers often move up or relocate for schools and family changes, making ARMs practical. The stable job market in nearby areas supports refinancing options if needed.
Properties here appreciate steadily, which helps if you need to refinance before the adjustment period ends. Strong equity gives you more options and better pricing when refinancing.
Your rate adjusts based on an index plus a margin, typically capped at 2% per adjustment and 5-6% lifetime. Most borrowers refinance or sell before the first adjustment.
Yes, most borrowers refinance 6-12 months before adjustment. You need sufficient equity and qualifying income, so plan ahead rather than waiting until the last minute.
ARMs typically start 0.5-1.5% below comparable fixed rates. On jumbo loans common here, that difference can save $1,000+ monthly during the initial period.
Conforming ARMs start at 5% down. Jumbo ARMs typically require 10-20% down depending on loan amount and lender requirements.
Match the term to your timeline. If you'll likely move within 7 years, a 7/1 ARM works. Uncertain timelines favor longer fixed periods or fixed-rate loans.
Adjustable Rate Mortgages (ARMs) in Lafayette