floating-rate mortgage

A floating-rate mortgage, also known as an adjustable-rate mortgage (ARM), features an interest rate that can change periodically based on a specified financial index, such as the LIBOR or the U.S. Treasury rate. Initially, it often offers a lower rate compared to fixed-rate mortgages, but the payments can increase or decrease over time as the index fluctuates. Typically, there's a fixed period at the start, after which the rate adjusts at set intervals. This type of mortgage is suited for those who anticipate interest rates may stay steady or decrease, or who prefer potentially lower initial payments.