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What is a 3/1 ARM?

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What is a 3/1 ARM?

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Adjustable rate mortgages (ARMs) typically start at a lower interest rate than fixed mortgages, so your monthly principal and interest payment may be lower. However, the mortgage payment for an ARM can change over time, since it continually “adjusts” to changing interest rates. With a 3/1 ARM, the initial interest rate remains fixed for the first three years of the loan, then may adjust annually for the remaining term of the loan.

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