What Is a 7/6 ARM and Should I Take One From a Utah Builder?
A 7/6 ARM is an interest rate structure where the rate stays fixed for seven years, then adjusts every six months after that, based on whatever index it’s tied to. Rates could go up or down from there, depending on where the market moves. Most 7/6 ARMs also carry a maximum and minimum rate cap, so the swings aren’t unlimited.
It can be an excellent way to get a lower payment now and afford a home that actually fits your lifestyle and needs, rather than settling for something smaller to hit a payment target on a higher fixed rate. When a Utah builder is offering a 7/6 ARM as an incentive, they’re frequently spending real money to give it to you for free — often a genuinely good deal to take.
Micah personally went with a 7/6 ARM on his own home — a 3.875% ARM over a 4.99% fixed rate. His read was that rates would likely drop within seven years and he could refinance before the loan ever adjusts. He also personally invests the monthly savings instead of absorbing it into the household budget — after seven years, that could add up to $50,000 to $60,000 saved, which could go toward buying down a rate later if rates haven’t dropped by then. Either way, the structure doesn’t require him to guess right about where rates go.
Full breakdown: 7/6 ARM vs. 30-Year Fixed in Utah New Construction: Which Saves More? · Utah Builder Incentives