3/1 Fixed ARM Period/Interest-only


A 3 year fixed adjustable rate interest only mortgage has a 36 month introductory, interest-only period and then adjusts annually thereafter. The remaining 27 years of the 3 year fixed adjustable rate interest only mortgage are fully amortized and include principal and interest in the payment. The annual adjustment in the interest rate for the 3 year fixed adjustable rate interest only mortgage is calculated using a lender approved index and a margin (the margin remains fixed for the life of the loan). There are many different economic indexes used, so it is good to discuss the index tied to your loan with an Alerio representative. The goal is to obtain a loan associated with a historically stable index. A 3 year fixed adjustable rate interest only mortgage product typically carries a lower premium or interest rate (initially) than a 30 year fixed, interest-only product. As with all interest-only products, voluntary payments toward principal are allowed, but not required during the 3 year interest only period.