Finance
ARM (Adjustable Rate Mortgage)
A concise definition for the California Real Estate Exam study guide.
Definition
A loan with an interest rate that adjusts periodically based on an index. Rate = Index + Margin, subject to periodic caps (how much it can change per period) and lifetime caps.
Why it matters on the California real estate exam
Know the definition, recognize how the term appears in a fact pattern, and compare it with related concepts before choosing an answer.
Study this topic in context
Read the related chapter for the surrounding concepts, examples, and exam tips.
Chapter 5: Finance, Mortgages & Loan Types →