An Adjustable Rate Mortgage (ARM) is a type of mortgage loan in which the interest rate can vary over time, typically in relation to an index such as the prime rate or the Treasury bill rate. This means that the monthly mortgage payment can fluctuate, potentially making it higher or lower depending on changes in the interest rate. Adjustable Rate Mortgages can be suitable for borrowers who expect their income to increase or plan to sell the property before the initial fixed-rate period ends. However, they also carry risks, particularly if interest rates rise significantly during the loan term, potentially leading to higher monthly payments and financial strain for borrowers.

The date on which the interest rate changes for an ARM.

The interval at which the interest rate can change. It is often expressed as "1/1" (meaning annually), "3/1" (meaning every three years), "5/1" (meaning every five years), and so on.

The length of time required to fully amortize the mortgage loan, typically expressed in months.

The annual cost of a mortgage, inclusive of interest, mortgage insurance, and loan origination fees.

An increase in a property's value due to market changes or other factors.

Any valuable ownership, including real property, personal property, and enforceable claims against others.

The transfer of a mortgage from one individual to another.

A mortgage that can be taken over by the buyer when a property is sold.

The transfer of a seller's existing mortgage to the buyer.

A provision in an assumable mortgage allowing a buyer to assume responsibility for the loan.

The fee paid to a lender resulting from the assumption of an existing mortgage.

A financial statement showing assets, liabilities, and net worth at a specific date.

Balloon mortgages feature low initial monthly payments for a fixed period, followed by a large "balloon" payment at the end of the term. Borrowers often refinance or sell the property before the balloon payment is due.

The final lump sum payment at the maturity of a balloon mortgage.

One-hundredth of a percentage point, used to denote fees or rates.

A preliminary agreement secured by earnest money, through which a buyer offers to purchase real estate.

A mortgage with payments made every two weeks, resulting in accelerated debt reduction.

A mortgage secured by a cooperative project rather than individual units.

Violation of a legal obligation.

A short-term loan secured by the borrower's present home to facilitate the purchase of a new one.

A mediator who negotiates contracts between parties for a fee or commission.

A mortgage with an initial lump sum payment to reduce monthly payments during the early years.

A provision allowing the lender to demand full repayment at a specified period's end.

A limit on interest rate or payment adjustments in an ARM.

Limits placed on how much the interest rate can increase or decrease during each adjustment period or over the life of the loan. There are usually initial adjustment caps, periodic adjustment caps, and lifetime caps.

A permanent property enhancement that adds value and prolongs useful life.

A refinance transaction where the new loan amount exceeds the existing mortgage, allowing the borrower to receive cash.

A time deposit with a specified interest rate and maturity date.

A document certifying a veteran's eligibility for a VA mortgage.

Establishes the maximum value and loan amount for a VA mortgage.

A statement confirming legal ownership of real estate.

A property's ownership history documented from earliest to latest.

The frequency of payment and interest rate changes in an ARM.

A title free of liens or ownership disputes.

Finalizing a property sale by signing mortgage documents and paying closing costs.

Expenses incurred during property ownership transfer.

Final documentation of closing costs.

A title search revealing issues affecting property ownership.

A co-signer guaranteeing loan repayment.

Asset securing loan repayment.

Efforts to bring a delinquent mortgage current or proceed with foreclosure if necessary.

Simultaneous first and second mortgages, often to avoid private mortgage insurance (PMI).

The total mortgage balances divided by the property's appraised value.

Fee for real estate or loan transaction services.

Formal loan offer with specified terms.

Shared spaces in planned unit developments or condominiums.

Financing for low- and moderate-income homebuyers to purchase and improve a home.

Property jointly owned by spouses in some states.

Properties similar to the subject property used for appraisal comparisons.

Interest earned on both principal and prior interest.

Converting rental properties to condominium ownership.

A mortgage that meets Fannie Mae or Freddie Mac guidelines.

Short-term financing for construction costs.

Provides credit history reports to lenders.

A condition that must be met for a contract to be binding.

A conventional mortgage is not insured or guaranteed by the government. These loans typically require higher credit scores and larger down payments compared to government-backed loans.

A feature that allows borrowers to convert their ARM to a fixed-rate mortgage at certain points during the loan term.

Allows converting an ARM to a fixed-rate mortgage.

An ARM convertible to a fixed-rate mortgage.

Residents own shares in a corporation owning property.

Employer-driven employee or operational moves.

An index determining ARM interest rate changes.

Mortgage clause obligating the borrower.

Organization compiling consumer credit data.

Legal document transferring property ownership.

Transferring property to satisfy debt and avoid foreclosure.

Alternative to a mortgage, conveying title to a trustee.

Failure to fulfill mortgage obligations.

Failure to make mortgage payments promptly.

Property value decline.

Lender's right to demand full loan repayment upon property sale.

Deposit to show home purchase seriousness.

Right-of-way allowing access to property.

Appraiser's estimate of a building's condition.

Total stable annual income.

Secure electronic fund transfer.

Anything affecting property title.

Signs ownership interest over to another.

Bans credit discrimination based on various factors.

Owner's property financial interest.

Holding funds or documents by a third party.

Holds funds for property expenses.

Periodic escrow account review.

Funds for property expenses held in escrow.

Escrow funds used for property expenses.

Portion of monthly mortgage for escrow expenses.

Individual's real and personal property.

Legal property occupant expulsion.

Title history investigation.

Insured by the Federal Housing Administration (FHA), these loans are designed to help low- to moderate-income borrowers qualify for homeownership with lower down payments and more lenient credit requirements.

Regulates consumer credit report disclosure.

Price buyer and seller agree upon.

Largest home mortgage funds supplier.

Insures residential mortgage loans.

Maximum real estate interest.

Fee paid to a mortgage broker.

Initial ARM rate change.

Primary property lien.

Home equity loan.

With a fixed-rate mortgage, the interest rate remains the same for the entire term of the loan, usually 15, 20, or 30 years. This provides stability and predictability, as monthly payments stay constant.

Rate decrease option before loan closing.

Protects against flood property damage.

Legal process for mortgage default property sale.

ARM with payments covering remaining balance.

The maximum interest rate that can be charged on the ARM after all adjustments have been made, including the index rate and the margin.

Projected settlement charges.

Department of Housing and Urban Development.

Closing costs statement.

Property damage insurance.

The current market value of a homeowner's property minus any outstanding mortgage balances or other liens.

Secured revolving credit line.

Loan using home equity as collateral.

Property condition assessment.

Property management organization.

Property damage insurance.

Monthly mortgage payment-to-income ratio.

Escrow account.

The benchmark interest rate to which the ARM is tied. Common indices include the LIBOR (London Interbank Offered Rate), the COFI (Cost of Funds Index), or the Treasury Securities index.

ARM interest rate benchmark.

Money value decrease.

ARM starting rate.

The introductory interest rate offered at the beginning of the loan term. This rate is typically lower than the fully indexed rate to attract borrowers.

Contract for deed.

Loan repaid through regular payments.

Charge for borrowed funds.

Interest accruing frequency.

ARM rate increase limit.

ARM rate maximum.

ARM rate minimum.

VA streamline refinance.

Investment value decrease due to interest rate changes.

Exchanging interest rate payments.

With an interest-only mortgage, borrowers pay only the interest on the loan for a certain period, typically five to ten years. After that, they must start making principal payments, resulting in higher monthly payments.

Property income recipient.

Concurrent property ownership.

Legal decision obligation.

Court-ordered property lien.

Jumbo mortgages exceed the loan limits set by government-sponsored entities like Fannie Mae and Freddie Mac. They are used to finance high-value properties and often require larger down payments and higher credit scores.

Second mortgage.

Property rental agreement.

Rental property purchase option.

Property description used in deeds.

Loan provider.

Lender's mortgage insurance payment.

Financing property purchase with borrowed funds.

Debt or obligation.

Property ownership claim.

ARM rate lifetime maximum.

ARM payment lifetime maximum.

Borrowed funds.

The total amount owed on the reverse mortgage, including any accrued interest and fees.

Loan balance-to-property value ratio.

Interest rate guarantee period.

Rate guarantee duration.

The percentage points added to the index to determine the interest rate on an ARM. For example, if the index rate is 3% and the margin is 2%, the ARM interest rate would be 5%.

ARM lender profit margin.

Current property value.

Loan term end.

Combined credit history report.

Property lien securing loan repayment.

Mortgage company.

Loan intermediary.

Property insurance compensating mortgage default losses.

MI payment.

Mortgage interest tax deduction.

Pays off mortgage if borrower dies.

Home loan.

Loan promise.

Loan fee.

Lender.

Borrower.

Occurs when the monthly mortgage payments are not enough to cover the interest due, resulting in the unpaid interest being added to the loan balance.

After-tax income.

Total assets minus liabilities.

Mortgage refinancing without cash withdrawal.

Property use violating zoning.

Property difficult to convert to cash.

One-time closing expenses.

Mortgage loan.

ARM nominal interest rate.

Lender's intent to foreclose.

Revolving credit mortgage.

Mortgage initiation charge.

Seller-financed property purchase.

Title insurance.

Property resident owner.

Principal, interest, taxes, and insurance mortgage components.

Real estate and personal property loan.

Shared appreciation mortgage.

The significant increase in monthly mortgage payments that can occur when the interest rate adjusts upward, especially if there is no cap to limit the increase.

Property development.

Subdivision map.

Interest rate discount fees.

Property decision authority.

Loan commitment.

Loan repayment before due date.

Loan early repayment provision.

A fee charged by some lenders if the borrower pays off the loan early, refinances, or sells the property.

Loan amount.

Outstanding loan amount.

The maximum amount of funds available to a homeowner through a reverse mortgage, based on factors such as the borrower's age, home value, and current interest rates.

Loan components.

Mortgage insurance compensating loan default losses.

Loan contract.

Real estate ownership tax.

Foreclosure sale.

Legal action to clear property title.

Title transfer relinquishing interest.

ARM interest rate benchmark.

Interest rate guarantee.

Property sales representative.

Real estate ownership trust.

Lender-owned property.

Contract termination right.

Document registration.

Document registration charge.

Loan replacement.

Loan refinance.

Outstanding loan amount.

Loan duration remaining.

Delinquent mortgage repayment agreement.

Property fund for major expenses.

New building value.

Designed for older homeowners, reverse mortgages allow borrowers to convert part of their home equity into cash, which is typically paid out as monthly payments or a lump sum. The loan is repaid when the borrower sells the home, moves out, or passes away.

Credit line.

Joint tenant property inheritance right.

Loan rates based on borrower risk.

Property sale and rental agreement.

Junior lien.

Loan resale market.

Loan collateral.

Seller-financed purchase.

Seller closing cost payment.

Mortgage loan administration.

Loan administration transfer.

Closing.

Closing costs documentation.

Lender investment in property appreciation.

Interest calculation method.

Single-owner business.

Property expense.

Amortizing loan payment calculation.

Land division.

Property under consideration.

Lender lien priority change.

Property measurement.

Property value from labor.

Expense reduction.

Concurrent property ownership.

Loan duration.

Legal property ownership.

Property title insurer.

Property ownership challenge.

Property ownership assurance.

Property ownership investigation.

Housing expenses-to-income ratio.

Property sale tax.

ARM interest rate benchmark.

Loan cost disclosure act.

Backed by the U.S. Department of Agriculture (USDA), USDA loans are intended for rural and suburban homebuyers who meet income and location eligibility criteria. They often offer low or no down payment options.

Loan risk assessment.

One-party obligation.

Loan without collateral.

FHA mortgage insurance fee.

Illegal lending practices.

Guaranteed by the Department of Veterans Affairs (VA), VA loans are available to eligible active-duty service members, veterans, and surviving spouses. They offer competitive interest rates, no down payment, and no private mortgage insurance (PMI) requirement.

VA foreclosure loan.

Mortgage with changing interest rates.

Right to use property.

Government agency aiding veterans.

Property inspection before closing.

Seller property condition guarantee.

Title transfer with property condition guarantee.

Builder property condition guarantee.

Loan encumbering property before sale.

Mortgage broker compensation.