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ARM
A mortgage on which the interest rate, after an initial period, can be changed by the lender. While ARMs in many countries abroad allow rate changes at the lender's discretion ("discretionary ARMs"), in the US most ARMs base rate changes on a pre-selected interest rate index over which the lender has no control. These are "indexed ARMs". There is no discretion associated with rate changes on indexed ARMs.
ALSO SEE: ADJUSTABLE RATE MORTGAGE, INTEREST RATE CEILING, ADJUSTMENT INTERVAL, CURRENT INDEX VALUE, CONVERSION OPTION, BALLOON MORTGAGE, MONTHLY PAYMENT, 3.95% ARM, MARGIN

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