Real Estate Glossary

What is Teaser Rate?

A teaser rate is a temporary, low interest rate that is offered to attract borrowers to a particular loan or mortgage product. Teaser rates are often used to promote adjustable-rate mortgages (ARMs) or other types of loans that have variable interest rates. The rate is typically lower than the rate that will be charged once the teaser period ends, and the rate is adjusted to the market rate. Borrowers should be aware that the monthly payments will increase once the teaser rate ends and the real rate starts.