What is Adjustable-Rate Mortgage (ARM)?
A mortgage with a rate that adjusts after an initial fixed period (e.g., 5/6 ARM = 5 years fixed, then adjusts every 6 months).
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions. ARMs typically start with a lower fixed rate for an initial period (5, 7, or 10 years), then adjust annually. A 5/6 ARM means 5 years fixed, then adjusts every 6 months. ARMs have rate caps limiting how much the rate can increase.