Adjustable-Rate Mortgage (ARM)

An adjustable-rate mortgage (ARM) is a loan with a variable interest rate tied to a benchmark index such as Prime, SOFR or the 1-, 5-, 7- or 10-Year Treasury. ARMs often start with a fixed rate, then reset periodically, often annually or semi-annually but can be at other frequencies, at a fixed spread over the applicable index. Periodic and lifetime caps and floors limit how much the rate can change.

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