Types of Mortgages - The Adjustable Rate (ARM)

The adjustable rate mortgage -- commonly referred to as an "ARM" -- gives you a fixed initial interest rate and monthly payment. The word "initial" is key here, because after an initial period (specified within the terms of the loan), an ARM loan will be subject to changes in market conditions.

Your interest rate during the initial fixed period will probably be lower than it would be or a regular fixed-rate mortgage. But uncertainty sets in after the initial period.

An ARM might be a good option for you if you only plan to stay in a home for a short while. If you in turn sell the house during the initial fixed-rate period, you benefit from the lower interest rate while avoiding the uncertainty that sets in after the fixed-rate period.

Learn more:
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Learn more about adjustable mortgages in our mortgage section
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