VRM is short for variable-rate mortgage.

It's a floating-rate mortgage where the payment remains fixed, despite increases and decreases in the lender's prime rate.

With VRMs, the borrower's amortization extends as rates increase and shrinks as rates decline. In 2023, some VRM borrowers saw their effective amortizations extend well beyond 40 years.

In cases where a VRM amortization is extended, lenders get the borrower back on track at renewal. At that time, a lender will adjust the borrower's payment to ensure they return to their originally scheduled amortization.

A VRM is technically different from an adjustable-rate mortgage (ARM), which has a payment that rises and falls with the prime rate.

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