



| Fixed Period Adjustable Rate Mortgages. There are mortgages available that start out as a Fixed rate mortgage (FRM) for a pre-determined period then becomes adjustable (ARM). The most common are: 2/28 – Fixed for the first 2 years then adjusts for the remainder of the loan term. 3/27 – Fixed for the first 3 years then adjusts. 5/25 – Fixed for the first 5 years then adjusts. 2/28, 3/27 and 5/25 Adjustable Rate Mortgage (ARM) Loans With 2/28, 3/27 and 5/25 ARMs, your interest rate is fixed for the first two, three or five years after the note date (the number before the slash refers to the number of years that the initial rate is fixed), after which the interest rate can change every year to the index value plus the margin (subject to the interest rate caps). |