Adjustable-rate mortgage (ARM)
- Usually available in 5-year, 7-year, and 10-year fixed-rate periods
- At the end of the fixed-rate period, if interest rates go up or down, your payments will also change at each scheduled adjustment date. Note: In most cases, there are “rate caps” to limit the amount your interest rate can go up or down. The APR may increase after the loan consummation.
- Generally offers a lower rate than a fixed-rate loan for the first 5-7 years of your term
- Saves you money initially, and may help you qualify for a more expensive home
- Best for buyers who know they’ll sell within 5-10 years