A mortgage loan where the interest rate may change in accordance with designated market indicator (such as the LIBOR), as opposed to a set interest rate (such at 6% annually).
Definition from Nolo’s Plain-English Law Dictionary
A mortgage loan with an interest rate that fluctuates in accordance with a designated market indicator -- such as the weekly average of one-year U.S. Treasury Bills -- over the life of the loan. To avoid constant and drastic fluctuations, ARMs typically limit how often and by how much the interest rate can vary.
Definition provided by Nolo’s Plain-English Law Dictionary.
August 19, 2010, 5:10 pm