Initial Interest Rate
Definition
- The introductory interest rate on an adjustable-rate mortgage (ARM), which typically changes at a predetermined time.
Synonyms
starting interest rate
Related Terms and Acronyms
- Adjustable-Rate Mortgage (ARM) — Acronym,
- A type of mortgage loan program in which the interest rate and payments may be adjusted as frequently as every month. The principal loan balance or term of the loan may also be adjusted to reflect the rate change. The purpose of the program is to allow mortgage interest rates to fluctuate with market conditions.
➥ A type of variable rate mortgage product. - Adjustment Period — Definition,
- The time between changes in the interest rate in an adjustable-rate mortgage.
- Convertible ARM — Definition,
- An adjustable rate mortgage (ARM) that can be converted to a fixed-rate mortgage under certain conditions.
- Interest Rate (IR) — Acronym, Very Important,
- The rate a lender charges an individual to borrow money.
- Mortgage Rate — Definition, Very Important,
- The interest rate on a mortgage loan.
➥ You can compare mortgage rates using this website by clicking 'Rates' above. - Open Mortgage — Definition, Important,
- A mortgage that can be paid off prior to maturity without penalty.
- Periodic Rate Cap — Definition,
- In an adjustable-rate mortgage (ARM), it limits how much an interest rate can increase or decrease from one adjustment period to the next.
- Posted Rate — Definition,
- The mortgage rates initially offered by a bank which a borrower is then expected to negotiate down.
- Prime Rate — Definition,
- The rate suggested by the Bank of Canada on which most banks base their prime mortgage lending rate.
- Step-rate Mortgage — Definition, Important,
- A fixed-rate home loan on which payments are lower at the beginning, typically for two years, and which then rise.
- Teaser Rate — Definition,
- Often called the introductory rate, it is the below-market interest rate offered to entice customers to switch credit cards or lenders.
- Variable Rate Mortgage (VRM) — Acronym, Very Important,
- Home loan in which the interest rate is changed periodically based on a standard financial index. Also called an "Adjustable-rate Mortgage."
➥ A type of mortgage loan offered by brokers and lenders.
