Admiralty Law

Antitrust Law

Asbestos Law

Civil Rights Law

Communications Law

Contract Law

Dispute Resolution

Divorce Law

Education Law

Family Law

Health Law

Immigration Law


Internet Law

Intellectual Property

Landlord Tenant Law

Law Schools

Lawsuit Funding

Lemon Law

Medical Malpractice

Other Law Fields

Personal Injury

Prepaid Legal Services

Structured Settlement

Tax Law

Workers Comp


Free Legal Advice

Online Legal Forms

Legal Answers

Legal Definitions

Advertise on LDB



Adjustable Rate Mortgage

Navigation:  Home > Mortgage> Adjustable Rate Mortgage



With an adjustable rate mortgage, the interest rates fluctuates. ARMs are tied to a number of indexes, usually published interest rates. The lender then adds an amount to the index, called a margin, which is customarily two percentage points or four percentage points. This number is the actual interest rate of the ARM. In general, the interest rates on an ARM changes every year, though, with some ARMs, there is a fixed rate mortgage for the first few years before the interest rate changes on a yearly basis. Most ARMs also have built in caps to reduce the risks of large increases in payments. A lifetime cap limits how much the interest rate can rise over the life of the loan, while periodic rate cap limits the amount your payments can raise at one time.


Sponsored Ads

Find a Lawyer