To encourage borrowers to accept adjustable rate mortgages (ARMs)rather than level-payment mortgages,mortgage originators generally offer an initial short-term introductory rate that is less than the prevailing market mortgage rate.This rate is referred to as a(n):

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A teaser rate is a short-term, introductory rate that is lower than the prevailing market mortgage rate. This rate is offered to encourage borrowers to accept adjustable rate mortgages (ARMs) rather than level-payment mortgages. The other options (floating rate, index rate, discount rate) do not specifically refer to the initial short-term introductory rate offered in ARMs.

To Encourage Borrowers to Accept Adjustable Rate Mortgages (ARMs)rather Than