All California Mortgage


Since 1992, All California Mortgage has provided quality service in every area of mortgage lending. From purchase to refinance to construction and commercial lending, we have access to a full range of mortgage sources. Our lending specialists are dedicated to finding you the right loan-with great rates, terms and costs to meet your unique needs. 



© 2018 All California Mortgage, a division of American Pacific Mortgage Corporation  NMLS #1850 / BRE #01215943
17 E. Sir Francis Drake Blvd., Suite 200, Larkspur, CA 94939     (800) 371-4545 
Licensed by the Department of Business Oversight under the CRMA     Disclaimer  |  Privacy Policy 

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Adjustable Rate Mortgage

Most adjustable rate mortgages (ARMs) have a low introductory rate or start rate aka the “teaser rate". The start rate is typically in effect from as little as 6 months to as long as 10 years. As a rule, the lower the start rate the shorter the time before the loan makes its first adjustment.

The index is the financial instrument that an adjustable rate mortgage is "tied to" or adjusted to. The most common indices are the 1-Year Treasury Security, The Treasury Average, the LIBOR (London Inter-Bank Offered Rate), the Prime Lending Rate, and the11th District Cost of Funds Index (COFI). Each of these indices can move up or down based on the movement or direction of the financial markets.

The margin is one of the most important aspects of an ARM because it is added to the index to determine the interest rate that you owe. The margin added to the index is referred to as the “fully indexed rate”. For example, if the current index value is 2.0% and your loan has a margin of 2.5%, your fully indexed rate is 4.50%. Margins typically range from 2.00% to 2.75%, depending on the index used, the quality of the loan application, (including the credit scores), the loan size in relation to the value of the property, etc.

Interim Caps
Many ARMs carry “interim caps” of six months or one year limiting the amount your rate can vary for a specified period of time. Interim interest rate caps are beneficial in rising interest rate markets, but can also keep your interest rate higher than the fully indexed rate, if rates are rapidly falling.

Lifetime Caps
ARMs commonly have a maximum interest rate or “lifetime” interest rate cap. The lifetime cap varies from one loan program to another. Loans offered with low lifetime caps may have higher margins, and the reverse can also be true. An applicant should carefully consider which feature is more important to them based on their particular scenario and how long they believe they will retain the mortgage.

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© 2015 American Pacific Mortgage Corporation. All information contained herein is for informational purposes only and, while every effort has been made to insure accuracy, no guarantee is expressed or implied. Any programs shown do not demonstrate all options or pricing structures. Rates, terms, programs and underwriting policies subject to change without notice. This is not an offer to extend credit or a commitment to lend. All loans subject to underwriting approval. Some products may not be available in all states and restrictions apply.

  ©  2018  All California Mortgage
a division of American Pacific Mortgage Corporation - NMLS #1850 / BRE #01215943
17 E. Sir Francis Drake Blvd., Suite 200, Larkspur, CA 94939     (800) 371-4545
Licensed by the Department of Business Oversight under the California Residential Mortgage Act     Disclaimer  |  Privacy Policy