Question 1

How long does the fixed period last on an ARM?

Accepted Answer

The most common options are 5, 7, or 10 years fixed. After that, the rate adjusts annually based on a market index.

Question 2

What caps limit how much my rate can increase?

Accepted Answer

Most ARMs have a 2% cap per adjustment and a 5-6% lifetime cap. Your worst-case payment is calculable before you close.

Question 3

Can I refinance out of an ARM before it adjusts?

Accepted Answer

Yes. Many borrowers refinance into a fixed loan before the adjustment period starts. Prepayment penalties are rare on conforming ARMs.

Question 4

Do ARMs work for investment properties in West Sacramento?

Accepted Answer

They can. Investors with shorter hold strategies often use ARMs to keep monthly carry costs down during the hold period.

Question 5

What index do ARM rates adjust to?

Accepted Answer

Most conforming ARMs adjust to SOFR, which replaced LIBOR. Your margin plus the index equals your new rate at each adjustment.

ARM Loans in West Sacramento: Lower Rates, Smarter Timing