Adjustable rate mortgage ARM

Definition

An Adjustable rate mortgage (ARM) is a mortgage on which the interest rate, after an initial period, can be changed by the lender.

An Adjustable rate mortgage (ARM) does not have an expressed fixed rate.

An Adjustable rate mortgage (ARM) is also sometimes known as the renegotiable rate mortgage, the variable rate mortgage or the Canadian rollover mortgage.

Generally, these changes are determined by a margin and an index so that the interest rate changes, up or down, are based on the market conditions at the time of the rate change.

Most often the interest rate changes are limited by a rate change cap and a lifetime cap.

The payments of an Adjustable rate mortgage loan could be adjusted as frequently as each month based on changes in the ARM interest rate index.

Related Terms

Other terms related to 'Adjustable rate mortgage ARM' starting with the letter 'A'

Agreement of sale, Appraisal fee, Application fee, Approval, Assumption

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