Glossary

Adjustable Rate Mortgage (ARM)    Unlike a fixed rate mortgage where the interest rate stays the same during the life of the loan, the ARM periodically moves interest rates relative to a specified index. The initial rate and payment amount remains for a short period—from a month to 5+ years. Initially, ARMs may offer lower interest rates than fixed rate mortgages, but the borrower assumes the risk that the interest will go up over time.1 Those looking for short-term ownership with flexible monthly payments (e.g., they want to buy property and fix it up to sell) would find this type of mortgage useful.

Affordability Index    This index is the ratio between median housing prices and median income; it measures how many years of income ...

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