What is adjustable-rate mortgage?
An ARM: a loan whose rate resets on a schedule from a published index (e.g., SOFR or a Treasury yield) plus the lender’s fixed margin, subject to periodic and lifetime caps. It reallocates interest rate risk from lender to borrower, usually in exchange for a lower starting rate.
Where you will use it: this term comes up in the Real Estate Finance course, and the full course glossary collects every term in one place.
Related terms
From the free Real Estate Finance course by Devon Coombs, CPA, MBA.