A “LIBOR ARM” sounds vaguely related to a frozen shoulder.
It’s not.
Pronounced “Lee′-bore,” it stands for the “London Inter-bank Offered Rate,” a widely used benchmark (or peg) for setting mortgage rates and other debt.
Meanwhile, “ARM” stands for “Adjustable Rate Mortgage.”
Definition, Please
What does all that mean in practice?
A homeowner with a LIBOR ARM will typically have a mortgage rate that’s fixed for a prescribed period — most commonly 3, 5, or 10 years.
Thereafter, the interest rate will re-set annually to the LIBOR rate plus a prescribed increment, usually 1% – 2%.
Your Realtor will be happy to decipher that and other arcane financing terms . . .
