The 3/27 Adjustable Rate Mortgage (ARM) is a 30-year mortgage with a three-year fixed rate period.
Fixed interest rates are generally lower than current rates on 30-year conventional mortgages.
After three years and for the remaining 27 years of the loan, the interest rate will be floating based on an index such as the yield on one-year US Treasury bills.
Because their monthly payments can increase significantly after an interest rate adjustment, borrowers should plan carefully before borrowing 3/27 ARM to make sure they are still affordable.