ARM (Adjustable-Rate Mortgage)
A mortgage where the rate can change at fixed intervals.
A 5/1 ARM is fixed for 5 years and adjusts annually after that. ARMs typically start lower than fixed-rate mortgages but carry future rate risk. Useful when you plan to sell or refinance before the adjustment period.
Related
- Fixed-rate mortgage — A mortgage where the interest rate stays the same for the entire term.