Also known as: adjustable-rate mortgage loans · adjustable rate mortgages · adjustable-rate mortgages · ARM loans · ARMs · ARM · adjustable rate mortgage
Written by attorneys · grounded in primary & secondary sources — see below
A mortgage loan in which the interest rate varies with an external index not under the control of the mortgagee. The variation may cause payments to exceed or fall below amounts paid by the mortgagor during some periods.
Anita Ali obtained an adjustable rate mortgage loan on her home. When the external index caused her payments to rise sharply, she contacted the lender to confirm the adjustment formula. The lender produced the index data showing the increase was valid.
Abigail Alvarez executed an adjustable rate mortgage loan to secure a family member's debt. The rate later increased beyond her expectations. She reviewed the loan documents to verify the index remained outside the lender's control.
Adrian Aguilar took out an adjustable rate mortgage loan tied to a market index. Payments exceeded the original amount during a high-index period. He calculated the new payment using the published index value supplied by the lender.
Select any source to read its text and confirm it supports the definition.
Alexis Archer secured an adjustable rate mortgage loan on property used for religious purposes. Rising rates threatened continued use of the land. She requested a payment schedule showing how future index changes would affect monthly amounts.
Angela Acosta entered an adjustable rate mortgage loan subject to later regulatory limits on interest adjustments. The caps altered her payment expectations. She compared the capped payments against the uncapped index-based amounts in the original note.
Arthur Abrams received an adjustable rate mortgage loan on terms that differed from those offered to others. The disparity affected his ability to retain the property. He examined whether the index and margin applied to his loan matched the lender's standard published terms.
The interest rate on an adjustable rate mortgage loan changes according to an external index outside the mortgagee's control. Fixed-rate mortgages maintain a constant rate throughout the loan term.
No. The Restatement illustration confirms that an adjustable rate mortgage loan tied to an external index does not violate applicable sections even if payments rise above the mortgagor's initial amounts during certain periods.
The index must remain outside the mortgagee's control. This prevents the lender from manipulating the rate to the borrower's disadvantage after the loan is made.
…points pricked out in terms of the taking of property; the freedom of speech, press, and religion; the right to keep and bear arms; the freedom from unreasonable searches and seizures; and so on. It is a rational continuum which, broadly speaking, includes a freedom from all substantial arbitrary impositions and…