What is a 10 year adjustable rate mortgage?

A ten year adjustable rate mortgage, or a 10/1 ARM, is a home loan with an interest rate that is subject to adjust according to prime rate index. The interest rate will be set at the initial interest rate for the first ten years of the loan. In the eleventh year the interest rate will adjust to current market standards, and will continue to adjust annually for the remaining life of the loan. The interest rate can either increase or decrease. Most loans have the adjustment period 'capped' to protect borrowers from payment shock.

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