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Adjustable-Rate Mortgage (ARM)

Last Updated: November 13, 2006 Related resource areas: Personal Finance

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A mortgage with predetermined adjustments of the loan interest rate at regular intervals based on an established index. The interest rate is adjusted at each interval to a rate equivalent to the index value plus a predetermined spread, or margin, over the index, usually subject to per-interval and life-of-loan interest rate and/or payment rate caps.


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