Adjustable rate mortgage (ARM)

Adjustable rate mortgage (ARM): Definition:
In contrast to a fixed-rate mortgage, in which the interest rate paid by the borrower remains constant over the whole life of the mortgage, ARMs represent an agreement that the interest rate will be adjusted based on market factors and/or in predetermined ways. The rate usually starts lower than a fixed-rate loan, and they can go up or down over the course of the mortgage's term.

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