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An adjustable-rate mortgage (ARM) may be the right loan option for you, especially if your income is likely to increase in the future or if you plan on being in the home for no more than three to five years. ARMs may offer a lower initial interest rate than most fixed-rate loans. The trade-off is that the interest rate can change periodically, usually in relation to an index, and the monthly payment will go up or down accordingly. Essentially, you get a lower initial rate with an ARM in exchange for assuming more risk.