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Adjustable Rate Mortgages (ARMs) in Avalon
Avalon's limited inventory and seasonal property use make ARMs a strong fit for many buyers. Most Avalon properties serve as second homes or vacation rentals, not primary residences.
An ARM with a 5, 7, or 10-year fixed period lets you lock lower initial rates while you test the island lifestyle. Many borrowers sell or refinance before the rate adjusts anyway.
ARMs typically require the same credit and income standards as fixed-rate loans. Expect 620+ credit for conventional ARMs, though 700+ gets you better margins.
Lenders calculate qualification using the higher of your start rate or a fully-indexed rate. This protects you from buying a payment you can't afford after adjustment.
Not every lender prices ARMs competitively in Avalon. Island properties get treated as higher-risk by some wholesale lenders due to location and seasonal markets.
We shop your scenario across 200+ lenders to find who's actually pricing ARMs well for Catalina Island. Rate spreads can vary by a full point between lenders on the same property.
I see two buyer profiles in Avalon: people testing the waters before committing long-term, and investors cycling properties every 5-7 years. Both benefit from ARMs.
The key is matching your ARM's fixed period to your actual hold timeline. If you're unsure about island living, a 5/1 ARM beats paying for a 30-year fixed rate you'll never use.
A 7/1 ARM typically starts 0.50% to 0.75% below a 30-year fixed rate. On a $1.2M Avalon property, that's $500-700 less per month during the fixed period.
Compare that to a jumbo fixed-rate loan or conventional 30-year. If you sell within seven years, you kept thousands in your pocket instead of giving it to the lender.
Avalon properties come with ferry access, limited inventory, and unique construction challenges. Some lenders won't touch island properties, period.
The seasonal rental market affects how lenders view income potential. If you're buying for rental use, document your rental strategy upfront to strengthen your application.
Your rate moves based on an index plus a margin set at closing. Most borrowers refinance or sell before adjustment kicks in.
Yes, but you'll qualify based on your personal income unless the property has 12+ months of rental history. Expect higher down payments for investment properties.
Absolutely. Lower initial payments help you compete in a tight market. You can always refinance to fixed later if you decide to stay long-term.
Only a subset of our 200+ lenders price ARMs competitively for Avalon. We identify those before you waste time on applications.
Match the fixed period to how long you'll own the property. Most Avalon buyers choose 7/1 ARMs as a middle ground.
Mortgage financing for independent contractors and freelancers who earn 1099 income instead of traditional W-2 wages.
Mortgage programs that allow borrowers to qualify based on liquid assets rather than traditional employment income.
Non-QM loans that use 12 to 24 months of bank statements to verify income for self-employed borrowers.
Short-term financing that bridges the gap between buying a new property and selling an existing one.
Debt Service Coverage Ratio loans that qualify investors based on a rental property's income rather than personal income.
Mortgage programs designed for non-US citizens and non-permanent residents who want to purchase property in the United States.
Asset-based short-term loans primarily used by real estate investors for property acquisition and renovation projects.
Mortgages that allow borrowers to pay only the interest for an initial period, resulting in lower monthly payments upfront.
Financing solutions tailored for real estate investors purchasing rental properties, fix-and-flip projects, or investment portfolios.
Home loans for borrowers who have an Individual Taxpayer Identification Number instead of a Social Security number.
Adjustable rate mortgages held in a lender's portfolio rather than sold on the secondary market, offering more flexible terms.
Non-QM mortgages that use a CPA-prepared profit and loss statement to verify income for self-employed borrowers.
Specialized mortgage programs designed to support homeownership in underserved communities with flexible qualification criteria.
Mortgages that meet the guidelines and loan limits set by Fannie Mae and Freddie Mac for secondary market purchase.
Financing for building a new home or making major renovations, typically converting to a permanent mortgage upon completion.
Traditional mortgage financing not backed by a government agency, offering flexible terms and competitive rates for qualified borrowers.
Innovative loan products that leverage projected home equity growth to provide favorable financing terms.
Government-insured mortgages from the Federal Housing Administration with low down payments and flexible credit requirements.
A revolving line of credit secured by your home equity that allows you to borrow funds as needed during a draw period.
A fixed-rate second mortgage that provides a lump sum of cash by borrowing against the equity built in your home.
Mortgages that exceed the conforming loan limits set by the FHFA, designed for financing high-value luxury properties.
Loans for homeowners aged 62 and older that convert home equity into cash without requiring monthly mortgage payments.
Government-backed zero down payment mortgages for eligible rural and suburban homebuyers who meet income limits.
Government-guaranteed mortgages for eligible veterans, active-duty service members, and surviving spouses with zero down payment.