LIBOR ARM Loans

What they are for
How they change over time
LIBOR ARM Loans Explained

LIBOR ARM loans are adjustable rate mortgage loans that are based on the LIBOR index, or the London Inter-Bank Offer Rate index.

The LIBOR index is one of many interest rate indexes. It is a "third party" index. This means that it is a universally published index. The interest rate adjusts based on the LIBOR index. It does not adjust just based on your bank's whim. By using a third party as a neutral arbiter of interest rate changes the banks are removed from a conflict of interest. You can look up the value of LIBOR on the internet.

A LIBOR ARM is a loan that adjusts based on the LIBOR index. It can adjust on different timeframes. It can be fixed for different timelines, such as for 1 year, 3 years, 5 years, 7 years, or 10 years.

After the initial fixed rate is over the LIBOR ARM loan adjusts based on a predetermined schedule. They can adjust on different timetables, such as monthly, twice a year, annually, etc.