Adjustable Rate Mortgage

An adjustable-rate mortgage (ARM) is a mortgage in which the interest rate applied on the outstanding balance differs throughout the lifespan of the loan, while the opening interest rate is fixed for a certain period and eventually changes at a yearly or monthly basis.

 

Adjustable-rate mortgages generally limit an increase in the interest rate or the expenditure per year or over the total lifespan of the loan.

 

An ARM can be a smart financial option for real estate investors who want to keep the loan for a restricted period and cannot afford any potential increases in their interest rate.

 

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