ARM: Adjustable Rate Mortgage

ARM: Adjustable Rate Mortgage

An adjustable rate mortgage is a type of mortgage in which the rate of the outstanding balance varies throughout the life of the loan. With an adjustable rate mortgage, it is more difficult for the borrower to predict and plan for monthly payments. Traditionally, the initial interest rate will be fixed at a lower rate for a certain period of time until it resets from time to time, based on the current interest rates, which can impact the monthly payment drastically.