ARM Loan Details

An adjustable-rate mortgage (ARM) allows the lender to change the interest rate—at periodic intervals—without altering other conditions of the loan agreement. When the interest rate is adjusted, the monthly principal & interest (P&I) payment is also readjusted.

By so doing, the ARM loan allows the borrower to share more of the loan's risk. This lowers the lender's relative risk exposure, so the interest rate on ARMs is usually much lower than those of comparable fixed-rate loans.

Several distinct features of the ARM loan will be discussed below. They will include the following subjects:

1.

Periods

2.

Index & Margin

3.

Caps

4.

Negative amortization

5.

Teaser rates & Start rates

6.

Conversion option

7.

The Adjustment process

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Real Estate Planning And Prosperity

Real Estate Planning And Prosperity

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