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Simple English definitions for legal terms

adjustable rate mortgage (ARM)

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A quick definition of adjustable rate mortgage (ARM):

An adjustable rate mortgage (ARM) is a type of home loan where the interest rate can change over time. Unlike a fixed rate mortgage where the interest rate stays the same for the entire loan, an ARM has a fixed interest rate for a certain period of time, then the interest rate can go up or down based on a benchmark rate. This can make the monthly payments go up or down too. Some people choose ARMs because they can have lower interest rates at the beginning, but they can also become more expensive over time.

A more thorough explanation:

An adjustable rate mortgage (ARM) is a type of home loan where the interest rate can change over time. This is different from a fixed rate mortgage, where the interest rate stays the same for the entire loan term.

ARMs come in different types, but the most common one has a fixed interest rate for a certain period of time, usually 5 or 7 years. After that, the interest rate can change every year based on a benchmark rate, like the Secured Overnight Financing Rate (SOFR), plus a margin. For example, if the benchmark rate is 3% and the margin is 2%, the new interest rate would be 5%.

ARMs can be attractive because they often have lower interest rates than fixed rate mortgages in the beginning. However, the interest rate can go up over time, which means your monthly payments could increase. There are also caps on how much the interest rate can increase each year or over the life of the loan.

For example, a 5/1 ARM means the interest rate is fixed for the first 5 years, and then can change every year after that. A 7/1 ARM means the interest rate is fixed for the first 7 years, and then can change every year after that.

It's important to understand the terms of an ARM before deciding if it's the right type of mortgage for you.

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MIAMI A
[] AromaticTroubledDormouse
20:55
How does one know if they are UR1 or UR2?
[] AromaticTroubledDormouse
20:56
CONGRATS MACAQUE!
TY
got a random stanford email and almost had a heart attack
ALSO CONGRATS!
Congrats1!
21:15
Miami A, yall I'm so excited I could cry.
21:15
Feel like I can finally stop holding my breath!! Whew!!!
[] baddestbunny
22:16
every time I get accosted by a strange man who follows me around because my male coworkers were too busy talking to walk me back to my car I get closer to saying we need to bring back traditional gender roles
Dkk
22:32
Nice! @Macaque
Dkk
22:32
@Aromatic, Have to guess.
Dkk
22:33
That sucks @Bunny do you have to go to the hospital?
[] baddestbunny
22:40
I said accosted not assaulted
23:35
guys. my notre dame address just went long is this good or bad
1a2b3c4d26z
23:37
Oooooo me too
23:37
omg is this good or bad
Dkk
23:47
Idk if gender roles are gunna fix that then.
23:49
it looks like most people who applied in october last cycle didn't get a decision until january... does it even mean anything that our addresses went long??
hows ED 2 compared to ED 1?
Dkk
0:10
No idea
windyMagician
0:34
reporting live to say my ndls address also went long
does it mean anything ^
Dkk
2:21
NDLS and Fordham took a very long time last year. It's good info for people to know.
[] baddestbunny
4:29
let’s get after it boys and girls
Dkk
5:21
I gtg to bed soon.
Dkk
5:22
Big day today. Gunna be a crazy one. I will sleep through the first half.
good morning lsd it is 5 am EST
also jazzy my ndls address went long ages ago i sadly do not think it means anything
my stanford address also went long LOL i think at most it's an indicator it's under review
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