ARM Tied to Index
Anika Anand executes an adjustable rate mortgage on her home. After five years the rate adjusts according to the index. The transaction complies with applicable standards.
Also known as: adjustable rate mortgage · adjustable rate mortgages · ARM · ARMs · variable-rate mortgage
Written by attorneys · grounded in primary & secondary sources — see below
A mortgage loan featuring an interest rate that remains fixed for an initial period and then adjusts periodically based on a specified external index plus a margin.
Select any source to read its text and confirm it supports the definition.
Anika Anand executes an adjustable rate mortgage on her home. After five years the rate adjusts according to the index. The transaction complies with applicable standards.
Alexis Archer, representing a class of borrowers with adjustable rate mortgages, negotiates a settlement. The proposal was negotiated at arm's length.
After an initial fixed period, the rate adjusts based on an external index such as LIBOR plus a margin of 200 to 300 basis points.
Supporting sources