Question 1

What makes portfolio ARMs different from regular ARMs?

Accepted Answer

The lender keeps the loan instead of selling it to Fannie Mae or Freddie Mac. This lets them approve borrowers and properties that don't meet agency guidelines.

Question 2

How much can my rate increase on a portfolio ARM?

Accepted Answer

Most cap at 2% per adjustment period and 5-6% over the loan's life. Your initial rate might be 7%, but it can't exceed 12-13% even in worst-case scenarios.

Question 3

Can I refinance before the rate adjusts?

Accepted Answer

Yes, most borrowers refinance during the fixed period. No prepayment penalties after year three on most portfolio ARMs we place.

Question 4

Do portfolio ARM lenders require tax returns?

Accepted Answer

Not always. Many accept 12-24 months of bank statements for self-employed borrowers or use DSCR for investment properties.

Question 5

What down payment do I need in Lake Forest?

Accepted Answer

Expect 20-25% down for most portfolio ARMs. Some lenders go to 15% for strong borrowers with excellent credit and reserves.

Question 6

Which Lake Forest properties work best for portfolio ARMs?

Accepted Answer

Single-family homes, condos in non-warrantable complexes, and investment properties. Also useful for jumbo loans above $832,750 in 2024.

Portfolio ARMs in Lake Forest: Flexible Financing Beyond Agency Guidelines