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Adjustable Rate Mortgages (ARMs) in Malibu
Malibu buyers often use ARMs for beachfront properties they plan to hold 5-7 years. The initial rate discount matters when you're financing $3M+ homes.
Most ARMs here are 7/1 or 10/1 structures — long enough to ride out market cycles. Shorter terms make less sense when property taxes alone run $40K annually.
Most Malibu ARMs require 20% down and 700+ credit for optimal pricing. Lenders want to see reserves covering 12-18 months of payments on million-dollar mortgages.
Income documentation follows standard conventional rules. Expect full tax returns if you're self-employed, which describes half our Malibu clients.
Portfolio lenders offer the best ARM structures for Malibu properties. They hold loans in-house and can price aggressively on coastal real estate.
Big banks are fine for conforming ARMs under $766,550, but portfolio lenders beat them once you hit jumbo territory. Rate caps and adjustment periods vary significantly between lenders.
I see two ARM buyers in Malibu: investors flipping high-end homes and relocating execs who know they'll move in 5-7 years. Both benefit from lower initial rates without long-term rate risk.
Focus on the rate cap structure, not just the starting rate. A 2/2/5 cap means your rate can jump 2% at first adjustment, 2% each period after, with a 5% lifetime max. That matters in volatile markets.
ARMs typically start 0.5-0.75% below comparable fixed jumbo rates. On a $2M loan, that's $800-1,200 monthly savings during the fixed period.
If you'll sell or refinance within 7 years, the ARM saves money. If you're keeping the property long-term, a fixed jumbo loan eliminates rate uncertainty after the initial period ends.
Malibu properties carry fire insurance challenges that affect ARM qualification. Lenders factor insurance costs into debt ratios, and coastal premiums run $8K-15K annually.
Beach and canyon properties may require additional wind or landslide coverage. Some ARM lenders are pickier about hazard zones than others — we know which ones underwrite Malibu aggressively.
7/1 and 10/1 ARMs are most common. They provide long fixed periods suited to typical Malibu ownership timelines while capturing rate savings.
Typically 0.5-0.75% below fixed rates. On a $2M loan, that's roughly $800-1,200 monthly savings during the initial period.
Yes, but lenders scrutinize hazard insurance heavily. We work with portfolio lenders experienced in coastal Malibu properties.
Rate changes based on an index plus margin. Rate caps limit how much it can increase — typically 2% per adjustment, 5% lifetime.
No. ARMs work best when you have a clear 5-10 year exit plan. Uncertain timelines favor fixed-rate jumbo loans.
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.