Adjustable Rate Mortgage (ARM)

An adjustable rate mortgage (ARM), also known as a variable rate mortgage, is a loan with an interest rate that changes periodically based on changes in the market. After an initial fixed-rate period (typically 5, 7 or 10 years), your interest rate increases or decreases once per year. You’re protected from drastic payment changes by an interest rate cap – a safeguard that determines the maximum amount your rate can change.

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