Adjustable-Rate Mortgage (ARM)
Definition of term
An adjustable-rate mortgage (ARM) is a type of mortgage that has an interest rate that changes over time. The initial interest rate on an ARM is usually lower than the interest rate on a fixed-rate mortgage, but it can increase over time. If you're considering an adjustable-rate mortgage, it's crucial to understand how the interest rate will change and what factors will affect the size of your monthly payments.