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HousingWire flagged a 10.4% drop in mortgage applications as the 30-year fixed hit 6.57%. That shift is pushing more Cotati buyers toward ARMs.
An ARM starts with a fixed rate for 3, 5, 7, or 10 years. After that, it adjusts based on a market index. Rates vary by borrower profile and market conditions.
620
Min Credit Score
5, 7, or 10 Years
Common Fixed Periods
Typically 5% Max
Lifetime Rate Cap
6.57% (Apr 2026)
30-Yr Fixed Benchmark
At Fully Indexed Rate
ARM Qualification
Most ARM programs require a 620 minimum credit score. Stronger scores — 700 and above — open better margins and caps.
Lenders qualify ARM borrowers at the fully indexed rate, not the start rate. Your debt-to-income ratio must hold up at the higher number.
Not every lender prices ARMs the same way. Margins, caps, and index choices vary significantly across wholesale lenders.
We shop ARM products across 200+ wholesale lenders. A better margin means your rate adjusts less aggressively after the fixed period ends.
A 5/1 ARM makes sense if you plan to sell or refinance within five years. Paying a higher fixed rate for 30 years on a short hold is just waste.
Watch the caps closely. A 2/2/5 cap means: 2% max first adjustment, 2% max each year after, 5% max lifetime. That math matters a lot.
A 30-year fixed gives you certainty. An ARM gives you a lower payment now, with rate risk later. Neither is wrong — it depends on your timeline.
Jumbo ARM buyers in Sonoma County often save more than conforming buyers. The rate spread between fixed and adjustable widens on larger loan amounts.
Cotati sits in Sonoma County, where home prices push buyers toward larger loan amounts. A lower ARM start rate can meaningfully reduce early payments.
Sonoma County conforming loan limits apply here. Buyers near or above that ceiling should ask about jumbo ARM options — the savings can be significant.
Common options are 5, 7, or 10 years. After that, the rate adjusts annually based on a market index.
Your rate moves up or down based on the index plus your lender's margin. Caps limit how much it can change at each adjustment.
Risk depends on your timeline. If you plan to sell or refinance before the fixed period ends, an ARM often makes financial sense.
Yes. Many borrowers refinance into a fixed rate before their adjustment date. Your options depend on rates and equity at that time.
Most programs start at 620. Scores above 700 typically get better margins and more favorable cap structures.
Yes, and they often deliver the largest savings on jumbo amounts. The gap between fixed and ARM rates widens at higher loan sizes.
Adjustable Rate Mortgages (ARMs) in Cotati