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KembaraXtra- Financial Terms- adjustable-rate mortgage (ARM) refers to a mortgage loan in which the interest rate changes periodically according to prevailing market interest rates.
Unlike fixed-rate mortgages, the borrowing cost under an ARM may rise or fall over time depending on movements in money market interest rates.
Adjustable-rate mortgages often begin with lower introductory rates, which may later increase as market conditions change.
Some borrowers are protected by interest-rate caps or ceilings that limit how high the mortgage interest rate can rise during the loan period.
ARMs are widely used in housing finance because they may offer lower initial payments, although borrowers also face the risk of future interest-rate increases.
Unlike fixed-rate mortgages, the borrowing cost under an ARM may rise or fall over time depending on movements in money market interest rates.
Adjustable-rate mortgages often begin with lower introductory rates, which may later increase as market conditions change.
Some borrowers are protected by interest-rate caps or ceilings that limit how high the mortgage interest rate can rise during the loan period.
ARMs are widely used in housing finance because they may offer lower initial payments, although borrowers also face the risk of future interest-rate increases.
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