adjustable rate mortgage ARM based on a pre-selected index that always changes and has a margin is a rate added to the index that doesnt change and represents the lenders operating costs and profit adjustment interval:how often the rate can change, yearly monthly quarterly etc.. rate caps: cap limit on rate changes (periodic or over the life of the loan. TEASER RATES: usually 1yr. with a sharp rise. CONVERTiBLE feture converts to fixed rate loan