An adjustable-rate mortgage (ARM) is a type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan. The rate is initially fixed for a specific period, after which it resets periodically, typically annually, based on an index that reflects the cost to the lender of borrowing on the credit markets.
An Adjustable-Rate Mortgage (ARM) is a type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan. The rate initially remains fixed for a period before adjusting at preset intervals.
An adjustment index is the published interest rate used to calculate the interest rate of an Adjustable-Rate Mortgage (ARM) at the time of origination or adjustment.
The adjustment interval refers to the frequency at which the interest rate of an adjustable-rate mortgage (ARM) is recalculated. It plays a crucial role in determining how often a borrower's mortgage payments may change.
Annual cap is a limitation on the amount by which the interest rate on an adjustable-rate mortgage (ARM) can increase or decrease over a one-year period, protecting borrowers from significant fluctuations in their monthly mortgage payments.
A Variable-Rate Mortgage (VRM) is a long-term mortgage loan applied to residential properties, under which the interest rate adjusts on a scheduled basis, typically every six months. Rate increases are restricted to no more than ½ point per year and a total of 2½ points over the Term. The term Adjustable-Rate Mortgage (ARM) is now more commonly used.
