Is an Adjustable-Rate Mortgage Worth Considering Right Now?

As fixed mortgage rates push higher, more borrowers are quietly turning to adjustable-rate mortgages. Could an ARM be the right strategy for your California home purchase?

With 30-year fixed rates now sitting at 6.81%, it's no surprise that adjustable-rate mortgages are starting to attract more attention. Last week, the ARM share of total mortgage applications ticked up to nearly 8% — a quiet but meaningful signal that buyers are exploring alternatives to lock in lower initial payments.

In a high-rate environment like this, an ARM can make a lot of sense for the right buyer. A 5/1 or 7/1 ARM typically offers a lower starting rate — sometimes meaningfully so — compared to a 30-year fixed. If you plan to sell or refinance within that initial fixed period, you could save a significant amount in interest without ever facing the adjustable phase.

That said, ARMs aren't for everyone. If you're planning to stay in your California home long-term or your budget doesn't have room to absorb a potential rate increase down the road, the predictability of a fixed rate is worth the premium.

California's high home prices mean even a small rate difference translates into real dollars every month. On a $700,000 loan, shaving half a point off your rate could save you hundreds per month.

The key is matching the loan structure to your actual plans — not just chasing the lowest number.

Curious whether an ARM or fixed rate makes more sense for your situation? Reach out to us today for a free consultation — we'll run the numbers and help you decide.