Final answer:
In an adjustable-rate mortgage, the maximum percentage the interest rate is permitted to increase each year and/or the maximum total increase over the life of the loan is known as the Margin.
Step-by-step explanation:
An adjustable-rate mortgage (ARM) is a type of loan used to purchase a home in which the interest rate varies with the rate of inflation. The maximum percentage the interest rate is permitted to increase each year and/or the maximum total increase over the life of the loan is known as the Margin.
The Margin is added to a reference interest rate, such as the LIBOR (London Interbank Offered Rate), to determine the new interest rate for the adjustable-rate mortgage.