Which element is NOT typically included in the description of an adjustable-rate loan?

An adjustable-rate loan typically includes several key elements that define how the interest rate operates and changes over time. Among these elements, fixed interest rate period, index and margin, and adjustment period are commonly described.

The fixed interest rate period refers to the initial phase during which the interest rate remains constant before it becomes adjustable. The index and margin define how the interest rate will fluctuate after the initial period, with the index reflecting a benchmark interest rate and the margin representing the lender's additional charge added to this index. The adjustment period indicates how often the interest rate will change after the initial fixed rate period expires.

Negative amortization, however, is not a standard element described in an adjustable-rate loan. While it can occur in certain types of loans if payments do not cover the interest accrued, it is not a defining characteristic or inherent feature of adjustable-rate loans. Instead, it represents a potential outcome when payments are structured inadequately, leading to an increase in loan balance over time. Therefore, it is appropriate to identify negative amortization as the option that is not typically included in the description of an adjustable-rate loan.