Adjustable Rate Mortgages

An Adjustable Rate Mortgage (ARM) is a type of home loan where the interest rate can change over time based on market conditions. Unlike a fixed rate mortgage, the interest rate on an ARM typically starts with a lower initial rate for a specific period and then adjusts periodically.

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During the initial fixed period—commonly 5, 7, or 10 years—the interest rate remains stable and monthly payments are predictable. After this period ends, the rate may increase or decrease depending on changes in the market.

Because ARMs often begin with lower interest rates, they may offer lower monthly payments in the early years of the loan. However, borrowers should be prepared for the possibility that payments could increase if interest rates rise in the future.