Loans

Paying For Houses

What is an adjustable rate mortgage?

It is a loan that offers a fixed rate of interest for a short period of time: three, five, or seven years. At that point, the interest rate may change up or down, depending on what index the interest rate is tied to. These loans also have limits as to how high the rate can change in a year and in the life of the loan. The borrower may continue to pay the loan at this variable or adjustable rate, or may also refinance the loan to a fixed rate conventional mortgage.



Close

This is a web preview of the "The Handy Personal Finance Answer Book" app. Many features only work on your mobile device. If you like what you see, we hope you will consider buying. Get the App