Question 1

What's the minimum loan size for competitive ARM rates in Hillsborough?

Accepted Answer

Most lenders price ARMs competitively starting at $1.5 million. Below that, fixed rates often beat ARM pricing even with the teaser advantage.

Question 2

Can I refinance an ARM before the first adjustment?

Accepted Answer

Yes, most borrowers refinance during the fixed period to capture rate changes or switch to fixed. No prepayment penalties apply on standard conforming and jumbo ARMs.

Question 3

How much can my rate increase at the first adjustment?

Accepted Answer

Most ARMs cap the first adjustment at 2% above your initial rate. A 5.5% start rate maxes at 7.5% on first adjustment, regardless of index movement.

Question 4

Do ARMs make sense for Hillsborough investment properties?

Accepted Answer

They work well if you plan to sell within the fixed period. Lower payments boost cash flow now, but adjustment risk makes long-term holds risky.

Question 5

What index do Hillsborough ARM rates follow?

Accepted Answer

Most use the 30-day average SOFR plus a margin of 2.25-3%. Your rate adjusts based on SOFR movement, capped by periodic and lifetime limits.

Adjustable Rate Mortgages in Hillsborough: Premium Financing for Affluent Buyers