An ARM refinance loan is a home loan with an interest rate that adjusts throughout the life of the loan. There is an introductory fixed-rate period that lasts for five, seven or 10 years depending on the specific ARM product you choose. During this time, ARM refinance loans typically have lower rates than 30-year fixed-rate loans. After this introductory rate term expires, the rate becomes variable for the remaining life of the loan based on an index and margin. ARM loans set limits on how high or low the rate may go.
During the adjustable-rate period, the estimated payment and rate may change. The market conditions at the time of the conversion to the variable rate and during the adjustment period afterwards dictate your rate.
Jumbo ARM refinance loans can exceed the conforming loan limit of $766,550 and up to $1,149,825 in high-cost areas like Alaska and Hawaii. If you have an established credit history and at least 10% equity (or down payment), you may qualify for an ARM refinance loan. You’ll also need to meet the established guidelines for income and assets like cash reserves.