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In an ARM with an initial rate discount, the lender gives up a number of percentage points in interest to reduce the rate and lower the payments for part of the mortgage term (usually for one year or less). After the discount period, the ARM rate usually increases according to its index rate.

Merriam-Webster Online Dictionary
discount (noun)
1.
a reduction made from the gross amount or value of something as
a) (1) a reduction made from a regular or list price
(2) a proportionate deduction from a debt account usually made for cash or prompt payment
b) a deduction made for interest in advancing money upon or purchasing a bill or note not due
2.
the act or practice of - discounting
3.
a deduction taken or allowance made
discount (verb)
transitive verb
1.
a) to make a deduction from usually for cash or prompt payment - a discounted price
b) to sell or offer for sale at a discount - discounting last year's model
2.
to lend money on after deducting the discount
3.
a) to leave out of account - disregard
b) to minimize the importance of - shouldn't discount his contributions
c) (1) to make allowance for bias or exaggeration in
(2) to view with doubt - discount a rumor
intransitive verb
d) to take into account (as a future event) in present calculations to give or make - discounts
discount (adjective)
1.
a) selling goods or services at a discount - discount stores a discount broker discount airlines
b) offered or sold at a discount - discount tickets
2.
reflecting a discount - discount prices
Merriam-Webster Online Thesaurus
discount (noun)
something that is or may be subtracted
SYNONYMS:
abatement, discount, reduction
RELATED WORDS:
giveback, kickback, rebate; dent, depreciation; decline, decrement, diminishment, diminution, drop, fall, loss; forfeit, forfeiture, penalty
NEAR ANTONYMS:
accretion, accrual, augmentation, boost, gain, increase, increment, raise, rise; appreciation
accession, addition
discount (verb)
1.
to dismiss as of little importance
SYNONYMS:
blink (at), brush (aside off), condone, discount, disregard, forgive, gloss (over), gloze (over), ignore, overlook, overpass, paper over, pardon, pass over, remit, shrug off, whitewash, wink (at)
RELATED WORDS:
explain, justify, rationalize; absolve, acquit, clear, exculpate, exonerate, vindicate; waive, wave (aside off)
NEAR ANTONYMS:
heed, mark, mind, note, object (to)
discount (verb)
2.
to express scornfully one's low opinion of
SYNONYMS:
bad-mouth, belittle, cry down, denigrate, deprecate, depreciate, derogate, diminish, dis ( diss), discount, dismiss, disparage, kiss off, minimize, play down, poor-mouth, put down, run down, talk down, trash, trash-talk, vilipend, write off
RELATED WORDS:
discommend; abuse, scold; disapprove (of), dislike; censure, condemn, criticize, denounce, reprehend, reprobate; asperse, defame, malign, rip, slander, slur, traduce, vilify; discredit, disgrace
NEAR ANTONYMS:
approve, countenance, endorse ( indorse), favor, recommend, sanction; commend, compliment, eulogize
acclaim, applaud, exalt, extol ( extoll), glorify, laud, magnify, praise
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