Jumbo 10/1 ARM Mortgage Loan

A Jumbo 10/1 ARM loan is an Adjustable-Rate Mortgage designed for high-value properties that exceed conventional loan limits. Key features include:

• A fixed interest rate for the first 10 years
• Annual rate adjustments after the initial 10-year period
• Higher loan limits compared to conventional mortgages
• Often lower initial interest rates compared to fixed-rate jumbo loans

This loan type is ideal for borrowers who need larger loan amounts and plan to sell or refinance within the first 10 years, or those comfortable with potential rate adjustments in exchange for lower initial payments.

After the initial 10-year fixed-rate period, the interest rate on a Jumbo 10/1 ARM adjusts annually. Here's how it typically works:

• The new rate is based on a financial index plus a margin set by the lender
• There are usually caps on how much the rate can increase:
  • Initial adjustment cap: Limits the first rate change
  • Periodic adjustment cap: Limits each subsequent annual adjustment
  • Lifetime cap: Sets the maximum rate increase over the life of the loan
• The rate can go up or down, depending on market conditions
• As the rate adjusts, your monthly payment will change accordingly

It's important to understand these adjustments and consider if you can afford potentially higher payments in the future. For more detailed information about rate adjustments, speak with one of our mortgage experts.

Eligibility requirements for a Jumbo 10/1 ARM can vary by lender, but typically include:

• Down payment: Usually up to 10% of the property value
• Credit score: Minimum of 580, though many lenders may require higher scores
• Debt-to-income ratio: Generally 50% or less
• Cash reserves: At least six months' worth of monthly payments
• Employment history: Proof of steady income
• Property type: Often limited to primary residences or second homes

These requirements are often stricter than those for conventional loans due to the higher loan amounts involved. It's important to note that meeting these minimum requirements doesn't guarantee approval. Lenders will consider your overall financial profile when making a decision.

For personalized information based on your financial situation, consult with one of our mortgage experts.

A Jumbo 10/1 ARM might be the right choice in the following scenarios:

• You're purchasing a high-value property that exceeds conventional loan limits
• You plan to sell or refinance within 10 years
• You're comfortable with potential rate adjustments after the fixed-rate period
• You want to take advantage of lower initial interest rates compared to fixed-rate jumbo loans
• You anticipate an increase in your income in the coming years
• You have a strong financial profile and can manage potential payment increases

However, it's important to carefully consider your long-term financial goals and risk tolerance. While the lower initial rates can be attractive, you should be prepared for potential rate increases in the future.

For personalized advice on whether a Jumbo 10/1 ARM is right for your situation, speak with one of our mortgage experts.