Real Estate for the Newcomer (Part 3)
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ARM – acronym for Adjustable Rate Mortgage; a mortgage loan subject to interest rate changes. When the rates adjust, ARM monthly payments decrease or increase in intervals that are determined by the lender. However, the change in monthly payment amount is subject to a Cap.
Cap – a limit (such as that placed on an adjustable rate mortgage) on how much interest rate or monthly payment can decrease or increase.
Credit Bureau score – a number that represents the likelihood that a borrower will default. This number is based on credit history, and is used to determine the borrower’s qualification for a mortgage loan.
