QandAs: Loans

What is 3/1 Jumbo ARM?

Answer:
A 3/1 Jumbo ARM is a home mortgage loan that features

an initial low rate for the first three years. After the initial rate period, the mortgage rate will adjust annually. Rate adjustments are based on an index, and the rate can increase or decrease.

With every rate adjustment, borrowers can expect their monthly payment to decrease, increase, or stay the same until the next scheduled adjustment. If the home price exceeds $417,000, which is the maximum amount for a conventional conforming home loan, borrowers must receive a Jumbo loan. Since Jumbo mortgages have higher interest rates, some borrowers choose an adjustable rate to keep payments low.


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