A 3/27 ARM is a mortgage that is initially a fixed rate (for the first 3 years), and then adjusts for the next 27 years. During the 3 year fixed period, the rate will not change, and neither will your monthly payments.The 3/27 ARM often has a prepayment penalty associated with it. If you think you may be in a position to pay the loan off sooner, you may want to negotiate a shorter prepay or consider a 2/28.
A 3/27 ARM is usually .1-.25% higher then a 2/28 ARM. IF you intend to refinance within 2 years you may be better off with a 2/28 ARM and the lower payment it carries.
The 3/27 ARM, or adjustable rate mortgage is a home loan that is fixed for the first 36 months and then it becomes adjustable thereafter. After the initial fixed rate period of 3 years the rate will adjust usually every 6 months, semi-annually, or every 12 months, annually. The 3/27 will have some rate caps meaning that the rate cannot go any higher than a certain amount and any lower than a certain amount but you will need to check with your mortgage professional to find this information out beforehand.
The 3/27 mortgage gives you a longer period of fixed payments but comes with a slightly higher rate than a 2/28 arm would.
Many home buyer with bad credit history use 3/28 ARM's, with the intention of repairing their credit profiles before the three years fixed rate period is up and refinance to a permanent mortgage with a lower interest rate.
The 3/27, like all ARMs, still is amortized over the full 30 years. Which means your payments are figured by using the full 30 year term. Many consumers have a tendency to get this confused. It is basically the same as a 30 year fixed, for the first 3 years, and then it will adjust.
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