What is an Adjustable-Rate Mortgage (ARM) loan and why would I choose one?

An Adjustable-Rate Mortgage (ARM) is a type of mortgage where the interest rate can change over time based on market conditions.

For the initial period of the mortgage, the interest rate is fixed for a set time. Commonly 3, 5, 7, or 10 years. After the initial period, the rate adjusts periodically (usually annually) according to a specific index plus a margin.

ARM loans often start with a lower initial interest rate than a fixed-rate mortgage. They can be a good option if you plan to sell or refinance before the adjustment period begins.