ARM (adjustable rate mortgage) loan
The interest rate on an ARM is adjusted periodically based on any change in the index chosen. The end result is a variable interest rate and monthly loan payment based on the current market. The loan provider must specify how the interest rate changes, such as by a national index. US Treasury bill rates are a common choice. Higher interest yields a higher monthly mortgage payment, with the reverse effect based on lower interest rates. As a measure of protection, a mortgage cap will limit the amount an interest rate can change.
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The following dictionary definition list is provided for clarification only. Note that many definitions are not directly applicable to mortgages, loans or other financial terminology in this glossary. Used with permission: WordNet 2.1 Copyright 2005 by Princeton University. All rights reserved.
adjustable
Adjective: adjustable (capable of being changed so as to match or fit) "adjustable seat belts"
Adjective: adjustable (capable of being regulated) "adjustable interest rates"
rate
Noun: rate, charge per unit (amount of a charge or payment relative to some basis) "a 10-minute phone call at that rate would cost $5"
Noun: rate (a magnitude or frequency relative to a time unit) "they traveled at a rate of 55 miles per hour"; "the rate of change was faster than expected"
Noun: pace, rate (the relative speed of progress or change) "he lived at a fast pace"; "he works at a great rate"; "the pace of events accelerated"
Noun: rate (a quantity or amount or measure considered as a proportion of another quantity or amount or measure) "the literacy rate"; "the retention rate"; "the dropout rate"
Verb: rate, rank, range, order, grade, place (assign a rank or rating to) "how would you rank these students?"; "The restaurant is rated highly in the food guide"
Verb: rate (be worthy of or have a certain rating) "This bond rates highly"
Verb: rate, value (estimate the value of) "How would you rate his chances to become President?"; "Gold was rated highly among the Romans"
mortgage
Noun: mortgage (a conditional conveyance of property as security for the repayment of a loan)
Verb: mortgage (put up as security or collateral)
loan
Noun: loan (the temporary provision of money (usually at interest))
Noun: loanword, loan (a word borrowed from another language; e.g. `blitz' is a German word borrowed into modern English)
Verb: lend, loan (give temporarily; let have for a limited time) "I will lend you my car"; "loan me some money"
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