Adjustable Rate Mortgage (ARM)

A mortgage loan that permits the lender to periodically adjust the interest rate on the basis of changes in a specified index.

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 the 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. Learn more about how ARMs work and what to consider (https://www.consumerfinance.gov/o wning-a-home/loan-options/#anchor_interest-rate_361de536a4acf8).

An Adjustable Rate Mortgage (ARM) refers to a Mortgage in which the interest rate can change periodically based on an index plus a margin.