Question 1

How much higher are portfolio ARM rates compared to conventional?

Accepted Answer

Expect 0.5-1.5% higher rates depending on your risk factors. Stronger borrowers with clean income and large reserves pay less. Rates vary by borrower profile and market conditions.

Question 2

Can I refinance before the adjustment period?

Accepted Answer

Yes, most borrowers do. No prepayment penalties are standard on portfolio ARMs. Many clients use these as bridge financing until they qualify for conventional programs.

Question 3

What happens if the lender sells my loan?

Accepted Answer

Portfolio lenders rarely sell these loans — that's the point of keeping them. If sold, your loan terms stay the same. The new servicer must honor existing adjustment caps and margins.

Question 4

Do I need a larger down payment than conventional loans?

Accepted Answer

Usually 20-25% minimum, sometimes more for complex scenarios. Lenders want equity cushion since they're holding the risk. Higher down payments can improve your rate and terms.

Question 5

How do adjustment caps protect me?

Accepted Answer

Caps limit how much your rate can increase per adjustment and over the loan life. Typical structure: 2% per adjustment, 5-6% lifetime cap. Always verify these before closing.

Portfolio ARMs in Belmont: Flexible Financing for Non-Traditional Scenarios