An adjustable-rate mortgage (ARM) is a type of loan for which the interest rate can change, usually in relation to an index interest rate. Your monthly payment will go up or down depending on the loan’s introductory period, rate caps, and index interest rate. With an ARM, the interest rate and monthly payment may start out lower than for a fixed-rate mortgage, but both the interest rate and monthly payment can increase substantially.
“Mortgage Key Terms.” Consumer Financial Protection Bureau, https://www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/. Accessed 21 May 2021.
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