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A mortgage that features predetermined adjustments of the loan interest rate at regular intervals based on an established index. The interest rate is adjusted at each interval to a rate equivalent to the index value plus a predetermined spread, or margin, over the index, usually subject to per-interval and to life-of-loan interest rate and/or payment rate caps.

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Adjustable-rate mortgage (ARM)

ARM

adjustable-rate

adjustable-rate mortgage

mortgage

loan

loan interest rate

index value

life-of-loan