What does ARM stand for anyway?

There’s another question here on funadvice about arm mortgages…I haven’t done the real estate thing before, and I’m wondering what that acronym means? Annually Rationalized Money? An Reversible Mortgage…no, that wouldn’t make sense. Can somebody help me on this one?

Answer #1

Annually Rationalized Money…not quite.

ARM = adjustable rate mortgage. The primary difference between ARM and traditional mortgage is that ARM goes up & down based on the prime rate. Fixed mortgages, or traditional mortgages, give you the same rate for the period of the loan. ARM mortgages, as I understand it, are best when the market is going UP or interest rates are forcast to go down.

Hope this helps.

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