MortgagesHomebuying Glossary
Adjustable-Rate Mortgage
Also known as ARM
A mortgage with an interest rate that starts fixed, then adjusts periodically based on the market.
In plain English
An ARM typically offers a lower fixed rate for an initial period (e.g. 5 or 7 years), after which the rate adjusts periodically based on a market index — meaning your payment can go up or down.
Why it matters
ARMs can make sense if you don't plan to stay in the home past the fixed period, but carry real risk of higher payments later if you stay longer than planned.
Where you'll run into it
Guides and tools on TheBuyingPath that cover adjustable-rate mortgage in context.
Related terms
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