Question 1

How long is the fixed period on an ARM?

Accepted Answer

Common structures are 5/1, 7/1, and 10/1. The first number is years at the fixed rate before adjustments begin.

Question 2

What index do most ARMs use today?

Accepted Answer

Most lenders now use SOFR as the benchmark index. Your rate adjusts based on SOFR plus the lender's margin.

Question 3

Can I refinance before my ARM adjusts?

Accepted Answer

Yes. Many Milpitas borrowers plan to refinance before the fixed period ends. There is no guarantee rates will be favorable then.

Question 4

What are rate caps on an ARM?

Accepted Answer

Caps limit how much your rate can increase. A 2/2/5 structure caps first adjustment at 2%, annual at 2%, and lifetime at 5%.

Question 5

Do ARMs make sense for Milpitas home prices?

Accepted Answer

For buyers with shorter hold plans, the lower initial rate reduces monthly costs significantly. Rates vary by borrower profile and market conditions.

Question 6

What credit score do I need for an ARM in Santa Clara County?

Accepted Answer

Most programs require a 620 minimum. Higher scores above 700 get better initial rate pricing from lenders.

ARM Loans in Milpitas: Lower Rates, Smarter Entry Points