Question 1

What does the 5/1 in a 5/1 ARM mean?

Accepted Answer

Your rate stays fixed for 5 years, then adjusts once per year after that. The initial period is where you lock in savings versus a 30-year fixed.

Question 2

How much can my rate increase after the fixed period?

Accepted Answer

Most ARMs have caps — typically 2% per adjustment and 5-6% lifetime. Your lender must disclose these before closing.

Question 3

Are ARMs harder to qualify for than fixed loans?

Accepted Answer

Not necessarily. Some programs qualify you at the start rate. Others stress-test at a higher rate. We identify which rule applies before you apply.

Question 4

Does an ARM make sense for a Del Rey Oaks military buyer?

Accepted Answer

Often yes. PCS orders typically move buyers every 2-4 years. That aligns well with a 5/1 or 7/1 ARM's fixed period.

Question 5

Can I refinance out of an ARM before it adjusts?

Accepted Answer

Yes. Many borrowers refinance or sell before the first adjustment. There's no obligation to hold the loan through its adjustable phase.

Question 6

What index do ARMs use in California?

Accepted Answer

SOFR is the most common index now, replacing LIBOR. Your margin plus the index equals your adjusted rate after the fixed period ends.

ARM Loans in Del Rey Oaks: Lower Rates, Real Strategy