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Adjustable Rate Mortgages (ARMs) in Auburn
Auburn buyers often use ARMs for seasonal homes or pre-retirement purchases they plan to sell in 5-7 years. The foothills market sees frequent turnover as retirees relocate or downsize.
ARMs make sense when you're confident about your exit timeline. Placer County's recreational property market rewards flexibility over 30-year commitment.
You need 620 minimum credit for most ARM programs, 680+ gets better margins. Lenders want proof you can afford the fully-indexed rate, not just the teaser rate.
Expect 5-10% down depending on loan amount. Jumbo ARMs require 20% down and 720+ credit to avoid pricing hits.
Most wholesale lenders offer 5/1, 7/1, and 10/1 structures. The number before the slash is your fixed period in years. After that, rates adjust annually.
Credit unions price ARMs aggressively but cap how high they can adjust. Portfolio lenders give more underwriting flexibility on income and assets.
I see Auburn buyers chase the teaser rate without modeling year 6. Ask your broker to show you worst-case scenarios based on lifetime caps and historical rate swings.
ARMs work great for bridge financing or if you're relocating for work. They backfire when life changes and you can't sell before adjustment. Run the numbers both ways.
A 7/1 ARM typically runs 0.5-0.75% below a 30-year fixed. That spread matters on Auburn's higher-priced properties. Rates vary by borrower profile and market conditions.
If you're certain about selling in 5-10 years, the ARM saves you thousands. If there's any chance you stay longer, conventional fixed eliminates rate risk entirely.
Auburn's recreational and retirement buyer pool creates natural 5-7 year turnover. ARMs align with how people actually use foothills properties—as stepping stones, not forever homes.
Placer County prices fluctuate with Bay Area migration patterns. If rates spike and you can't sell, you're stuck with an adjusted payment. That risk is real in smaller markets.
Your rate adjusts annually based on an index plus a margin, usually capped at 2% per adjustment and 5-6% lifetime. Most Auburn buyers sell or refinance before adjustment.
Yes, if you still qualify and rates are favorable. Many Auburn homeowners do this in year 4-5 to lock in before adjustment kicks in.
Yes, if you put down less than 20%. MI requirements are identical to fixed-rate loans regardless of ARM structure.
740+ gets top-tier pricing. Every 20-point drop below that costs about 0.125-0.25% in rate on conforming ARMs.
Only if you value the extra security and the rate spread is under 0.125%. Most Auburn buyers exit within 7 years anyway.
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.