Glossary
ARM (Adjustable-Rate Mortgage)
A mortgage whose interest rate adjusts periodically based on a published index plus a margin, after an initial fixed period.
Common structures: 5/6 ARM (fixed 5 years, adjusts every 6 months), 7/6 ARM, 10/6 ARM. Index choices include SOFR (replacing LIBOR post-2023) and the 1-year CMT. Lifetime caps and per-adjustment caps limit how much the rate can move.
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