Adjustable-Rate Mortgages (ARMs)
An ARM starts with a fixed interest rate for an initial period — typically 5, 7, or 10 years — then adjusts annually based on a market index plus a margin. When you don’t plan to keep the loan for 30 years, an ARM is often the cheaper choice. The intro rate is usually 0.5–1.0% lower than a 30-year fixed.
Common ARM structures
• 5/6 ARM — fixed for 5 years, then adjusts every 6 months
• 7/6 ARM — fixed for 7 years, then adjusts every 6 months
• 10/6 ARM — fixed for 10 years, then adjusts every 6 months
When an ARM makes sense
• You expect to sell or refinance within the fixed-rate period
• You want to maximize buying power with a lower payment today
• You’re financing a luxury / jumbo property where the ARM-vs-fixed spread is large
• You’re an investor on a DSCR loan that prices better with an ARM structure
Rate caps protect you
Every ARM we write has three layers of caps:
• Initial adjustment cap — how much the rate can change at the first adjustment
• Periodic cap — how much it can change at each subsequent adjustment
• Lifetime cap — the absolute ceiling over the life of the loan
We’ll show you the worst-case-scenario payment before you sign so there are no surprises.
Why UWL for ARMs
ARM pricing varies more between lenders than fixed-rate pricing does. We shop your ARM file across multiple wholesale lenders and quote you several structures side-by-side — so you can decide which combination of intro period and cap structure best matches your timeline.
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