Question 1

What happens when my ARM adjusts after the fixed period?

Accepted Answer

Your rate changes based on an index plus a margin, subject to caps. A 5/1 ARM adjusts once after five years, then annually. Your payment can't jump more than the cap allows.

Question 2

Can I refinance my ARM before it adjusts?

Accepted Answer

Yes, most Sanger ARM borrowers refinance or sell before the first adjustment. You'll need sufficient equity and qualifying income at that time. Rates vary by market conditions.

Question 3

How do I know if an ARM makes sense for a Sanger purchase?

Accepted Answer

ARMs work if you'll move or refinance within 5-7 years. If you might stay longer, the rate uncertainty outweighs the initial savings for most borrowers.

Question 4

What's the difference between a 5/1 and 7/1 ARM?

Accepted Answer

5/1 means five years fixed then annual adjustments. 7/1 gives seven years fixed. Longer fixed periods cost slightly more but provide rate certainty longer.

Question 5

Do ARMs require mortgage insurance like fixed loans?

Accepted Answer

Yes, PMI rules are identical. Put down less than 20% and you'll pay mortgage insurance until you reach 20% equity through payments or appreciation.

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