3/27 adjustable-rate mortgage - 3/27 arm

Definition

Type of short term adjustable rate mortgage offered to subprime borrowers until the borrower attains a better credit rating and can refinance to a mortgage with more attractive terms. These will typically have a fixed interest rate for three years and then a floating interest rate, based on an index plus a margin.
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3-2-1 buydown 3-6-3 rule