Adjustable Rate Mortgage (ARM)
The interest rate on an ARM is not fixed for the life of the loan. These mortgages adjust periodically based on an index that changes with market conditions. The rate of interest is the sum of the index plus a margin. Most ARMs have periodic interest rate and payment caps, as well as a life cap.
Person authorized to act on behalf of another in dealings with third parties.
The gradual reduction in the principal of a mortgage through scheduled installment payments.
A schedule that shows the portions of each payment that are applied to interest and to principal. It also shows the loan balance remaining after each payment.