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Loanfactz Definitions

Glossary of Legal Terms, Loan Terms and Home Construction, Repair and Maintenance Definitions. Some words have more than one meaning. Only those meanings relating to this site will be used.

All of A

Adjustment Period

The amount of time between changes in the * interest rate in an * adjustable rate mortgage (ARM). This period can be any length of time as set forth by the lender, common periods are 1, 2, 3, and 5 years. A loan with an adjustment period of one year is called a one-year ARM, which means that the interest rate can change once a year.

Glossary For This Page
(In Alphabetical Order)

* Adjustable Rate Mortgage (ARM)
Also known as a variable rate loan, usually offers a lower initial rate than * fixed rate mortgage loans. The interest rate can change at specified time periods based on changes in an interest rate index that reflects current finance market conditions. When the interest rate on an ARM increases, your monthly payments will increase and when the interest rate on an ARM decreases, your monthly payments will be lower. Most ARMs have * caps.

* Cap
A limit on the amount the interest rate or monthly payment can increase in an adjustable rate mortgage.

* Fixed Rate Mortgage
A home mortgage loan in which the interest rate does not change during the entire term of the loan.

* Interest Rate
The percentage of a sum of money charged to the borrower by the lender for borrowing the lender's money.

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