Question 1

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

Accepted Answer

The rate stays fixed for 5 years, then adjusts once per year after that. Your payment can change at each adjustment based on market index moves.

Question 2

Can I refinance before my ARM adjusts?

Accepted Answer

Yes. Many borrowers refinance into a fixed rate before the adjustment period starts. Market conditions at that time will determine your options.

Question 3

Are ARM rates always lower than fixed rates?

Accepted Answer

Typically yes — the initial rate is lower in exchange for future rate risk. The spread varies by lender and market conditions. Rates vary by borrower profile and market conditions.

Question 4

What credit score do I need for an ARM in San Juan Bautista?

Accepted Answer

Most lenders require a 620 minimum. For the best pricing on ARM products, aim for 740 or above.

Question 5

How much can my ARM rate increase at adjustment?

Accepted Answer

That depends on your cap structure. A 2/2/5 cap limits each adjustment to 2% and total lifetime increases to 5%.

Question 6

Do ARMs make sense for San Benito County buyers?

Accepted Answer

They can. If you plan to sell or refinance within the fixed window, the initial rate savings can be significant versus a 30-year fixed.

ARM Loans in San Juan Bautista — Lower Rates, Calculated Risk