What does a 3/1 adjustable-rate mortgage mean?

A 3/1 ARM means you have a fixed interest rate for three years, and your interest rate adjusts each year after that.

How does a 3-year ARM loan work?

A 3-year ARM gives you a fixed interest rate for the first three years of your loan. After that, your rate adjusts regularly for the remaining 27 years of your mortgage.

What is the 3-year ARM rate?

3-year ARM interest rates are based on the SOFR (Secured Overnight Financing Rate), so they change every day.

How does an adjustable rate mortgage (ARM) work?

An adjustable-rate mortgage starts off with a fixed interest rate for a certain period of time. A 5/1 ARM, for example, has a fixed rate for five years, while a 3/6 ARM has a fixed rate for three. After that fixed-rate period, your lender will adjust your interest rate on a scheduled basis for the remainder of your 30-year loan term.

Chloe Goodshore

Former Contributor

Chloe Goodshore is a freelancer writer who specializes in personal and business financing. She has a passion for making boring things sound interesting and complex things sound simple, all so readers can make well-informed decisions.

Chloe’s work has been featured on Yahoo! Finance, U.S. News & World Report, StartupNation, and more.

In her free time, Chloe enjoys quilting, reading, and playing video games.

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