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Adjustable Rate Mortgages (ARMs) have a distinct advantage of beginning with a lower interest rate than that of a fixed rate mortgage, typically, 1-2 percent below a comparable fixed rate mortgage.


  • Down payments as low as 3.5%

  • Lower credit score accepted

  • Flexible qualification guidelines

  • Fixed-rate and adjustable-rate loan options

  • Refinance up to 96.5% current home value

  • Cash out and debt consolidation financing

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There are several characteristics to ARM loans. They include the Index, the Margin, Change Caps, Payment Caps, and lifetime Caps. We’ll do our best to summarize but it’s strongly suggested that you contact an Efinity Mortgage Licensed Financial Professional for a further explanation to these products.


The index of an ARM is the financial instrument that the loan is “tied” to, or adjusted to. The most common indices are the 1-Year Treasury Security, LIBOR (London Interbank Offered Rate), Prime, 6-Month Certificate of Deposit (CD) and the 11th District Cost of Funds (COFI). Each of these indices move up or down based on conditions of the financial markets.

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The margin is one of the most important aspects of ARMs because it is added to the index to determine the interest rate that you pay. The margin added to the index is known as the fully indexed rate. As an example if the current index value is 5.50% and your loan has a margin of 2.5%, your fully indexed rate is 8.00%. Margins on loans range from 1.75% to 3.5% depending on the index and the amount financed in relation to the property value.


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