Adjustable-Rate Mortgage (ARM)
Real estateGlossary term
Definition
A mortgage with an interest rate that adjusts periodically based on market conditions. Initial rates are typically lower than fixed-rate mortgages but can increase over time.
Related terms
- Fixed-Rate MortgageA mortgage where the interest rate remains constant throughout the loan term, providing predictable monthly payments. Most common terms are 15 and 30 years.
- MortgageA loan used to purchase real estate where the property serves as collateral. The borrower makes regular payments over a set term (typically 15-30 years) until the loan is paid off.
- Interest RateThe percentage charged by a lender for borrowing money, or earned on savings and investments. Can be fixed or variable depending on the financial product.
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