ARM (Adjustable-Rate Mortgage)
A mortgage with an initial fixed period, then a rate that adjusts periodically.
Why it matters
A 7/1 ARM is fixed for 7 years, then adjusts once a year based on an index plus a margin. Adjustments have caps but no floor above the margin. ARMs make sense when you know you will move or refinance before the adjustment period.
See also
Educational only — not financial, tax, or legal advice.