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Adjustable Rate Mortgages (ARMs) in Dixon
Dixon sits in Solano County where home prices generally run below Bay Area peaks but above Central Valley averages. ARMs make sense here if you plan to move within 5-7 years or expect income to rise substantially.
Most Dixon buyers chase lower monthly payments early on. An ARM delivers that through a reduced initial rate, typically 0.5-1% below comparable fixed mortgages. The catch: your rate adjusts after the fixed period ends.
Lenders treat ARMs like conventional loans for qualification. You need 620+ credit for conforming ARMs, though 700+ gets better rates. Debt-to-income caps at 43-50% depending on the lender.
Down payment starts at 5% for conforming ARMs, but 10-20% is common in practice. Jumbo ARMs require 20% down minimum. Expect full income documentation — W-2s, tax returns, pay stubs.
Every major lender offers ARMs, but the terms vary wildly. Some cap annual adjustments at 2%, others at 5%. Lifetime caps range from 5-6% above your start rate. These details matter more than the initial rate.
We see the best ARM pricing on 5/1 and 7/1 products — five or seven years fixed before adjustments begin. The 3/1 ARM saves maybe 0.125% more but adjusts too soon for most Dixon buyers who stay put longer than expected.
Dixon buyers often underestimate how long they'll stay. We've closed dozens of ARMs for clients who swore they'd sell in five years, then watched them hit year eight still in the house. If there's any chance you stay past the fixed period, model the worst case.
Run the numbers at your lifetime cap rate. If a 5/1 ARM starts at 6% with a 5% lifetime cap, can you handle 11%? Most can't. That's why we usually steer long-term buyers to fixed loans despite the higher initial payment.
A 5/1 ARM in Dixon might start at 5.75% while a 30-year fixed sits at 6.5%. On a $500k loan, that's $180/month savings early on. But after five years, your ARM could jump to 7.75% or higher, erasing that advantage fast.
Conventional fixed loans make sense if you value predictability. ARMs fit if you're relocating for work, upgrading homes as family grows, or refinancing once income rises. The key is matching loan structure to your actual plans, not hopeful guesses.
Dixon's proximity to Travis Air Force Base means we see steady turnover among military-connected buyers. ARMs work well for this group since reassignments typically happen within 3-5 years, well before the first adjustment.
Solano County property taxes run around 1.1-1.2% of assessed value. When your ARM adjusts upward, remember your total housing cost includes that tax bill plus insurance. A 2% rate bump might push monthly costs up 15-20% once you factor everything in.
Typically 0.5-1% lower for 5/1 or 7/1 ARMs. The gap widens during volatile rate periods but narrows when the market stabilizes.
Your rate recalculates based on an index plus a margin, typically annually after the fixed period. Annual caps limit how much it can jump each year.
Yes, if you qualify and rates are favorable. But refinancing costs 2-3% of the loan amount, so it's not free.
No, qualification standards are identical. Lenders just calculate your payment at a higher rate to ensure you can afford potential adjustments.
Only if you're certain about moving within the fixed period. First-timers usually stay longer than planned, making fixed loans safer.
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.