Question 1

How long is the fixed period on an ARM?

Accepted Answer

Common options are 5, 7, or 10 years. After that, the rate adjusts annually based on a market index plus your lender's margin.

Question 2

What index do ARM rates use today?

Accepted Answer

Most new ARMs use SOFR — the Secured Overnight Financing Rate. LIBOR is no longer used for new originations.

Question 3

Can I refinance before my ARM adjusts?

Accepted Answer

Yes. Many borrowers plan to refinance before the fixed period ends. There's no guarantee rates will be lower, so build in a cushion.

Question 4

What are rate caps on an ARM?

Accepted Answer

Caps limit how much your rate can rise. A 2/2/5 cap means 2% at first adjustment, 2% per year after, and 5% max over the loan's life.

Question 5

Do ARMs work for investment properties in Napa County?

Accepted Answer

Yes, but expect stricter qualifying standards. Lenders typically require 20–25% down and a stronger credit profile for non-owner-occupied ARMs.

Question 6

Is an ARM risky if I plan to stay long-term?

Accepted Answer

It depends on your caps and index. If you stay past the fixed period, your payment can rise significantly — model the worst case before deciding.

ARM Loans in American Canyon — Lower Rates, Smarter Strategy