mortgage

For PITI's sake: Mortgage acronyms defined

Mortgage » For PITI's sake: Mortgage acronyms defined

ARM
ARM © iStock

ARM

An adjustable-rate mortgage, or ARM, is a home loan in which the interest rate can change based on movement in an agreed-upon index, such as the London Interbank Offered Rate, or Libor.

Usually, ARMs start with lower rates than fixed loans. But there's always the risk that the borrower can eventually end up paying more than if he or she had secured a fixed rate.

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
From LTV to PITI: Speak your mortgage lender's language
advertisement

Connect with us