An adjustable-rate mortgage (ARM) is a type of home loan where the interest rate can change periodically based on fluctuations in a specific benchmark or index, often resulting in lower initial rates compared to fixed-rate mortgages. This loan structure allows homeowners to benefit from lower payments initially, but they also face the risk of higher payments in the future if interest rates rise. Understanding ARMs involves looking at different types of real estate loans, how they are amortized, and how they fit into homeownership and financing options.
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