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Adjustable Rate Mortgages (ARMs) in Paramount
Paramount sits in the heart of Los Angeles County, where median home prices typically run $150,000-$200,000 below coastal communities. ARMs make sense here if you're moving up in 5-7 years or expect income growth.
Most Paramount buyers I work with use 5/1 or 7/1 ARMs to capture lower initial rates. The fixed period covers their ownership window, then they sell before adjustments kick in.
ARMs require the same credit and income standards as fixed-rate loans. Expect 620+ credit for conforming ARMs, 3-5% down minimum depending on the program.
Lenders qualify you at a higher rate than your initial payment. This stress test ensures you can handle future adjustments, which matters more in rising rate environments.
Not every lender prices ARMs competitively. I shop 200+ wholesale lenders because rate spreads between them run 0.25-0.75% on identical ARM products.
Some lenders offer portfolio ARMs with more flexible adjustment caps. These work well if you're self-employed or have income that doesn't fit agency boxes but still want an ARM structure.
I steer Paramount buyers toward 7/1 ARMs over 5/1s right now. The rate difference is minimal, and you get two extra years of payment certainty before your first adjustment.
Always check the adjustment caps. Most ARMs cap at 2% per adjustment and 5-6% lifetime. A 5/1 ARM starting at 6% can't exceed 11-12% even in worst-case scenarios.
ARMs beat fixed-rate loans if you'll move or refinance within 7 years. You pay less interest during the fixed period and avoid the higher rate premium on 30-year fixed mortgages.
Conventional fixed loans make sense if you're staying 10+ years or rates are historically low. The certainty premium costs roughly 0.75-1% in rate, which compounds significantly over decades.
Paramount's position in central LA County means buyers often leverage ARMs as stepping stones. You build equity here, then move to pricier areas when income grows or family needs change.
Property taxes and HOA fees stay relatively stable in Paramount. Your ARM adjustment is the main variable cost, which makes budgeting easier than in areas with volatile special assessments.
Your rate adjusts annually based on an index plus margin. Most ARMs cap adjustments at 2% per year and 5-6% over the loan life.
Yes, most borrowers refinance during the fixed period. No prepayment penalties apply to standard ARMs.
No, down payment requirements match fixed-rate programs. Conforming ARMs start at 3-5% down depending on the specific product.
ARMs typically run 0.5-1% below comparable fixed rates. The spread varies with market conditions and lender pricing.
Match the fixed period to your ownership timeline. 7/1 ARMs currently offer better value with minimal rate premium over 5/1 products.
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.