Loan Types
How does an adjustable-rate mortgage (ARM) work?
Context
ARMs can be attractive for a lower initial rate, but the structure differs meaningfully from a fixed-rate loan.
The short answer
An ARM has a fixed rate for an initial period (for example 5, 7, or 10 years), then adjusts periodically based on an index (commonly SOFR) plus a margin, within rate caps.
Things to keep in mind
ARMs can start lower than fixed rates but carry future-adjustment risk; they can fit shorter time horizons better than long-term ones.
Next step
DMF explains the caps and margins before you commit — ask us to walk through the terms.
Have a question about your own situation?
DMF serves Minnesota homebuyers and homeowners. We submit your purchase or refinance file to multiple wholesale lenders and compare what each one offers, so your pricing is not limited to one lender's rate sheet.
Davis Monroe Financial, LLC is a mortgage broker, not a lender. We do not make credit decisions or fund loans. Rate locks are issued by the lender; we submit and manage lock requests on your behalf. All loans are subject to credit approval. Rates and terms are subject to change without notice.