Adjustable-Rate Mortgage (ARM)
An adjustable-rate mortgage has an interest rate that's fixed for an initial period — often 5, 7, or 10 years — then adjusts periodically with the market. It usually starts lower than a fixed-rate loan, trading a cheaper early payment for uncertainty later.
A '5/1 ARM' is fixed for five years, then adjusts annually within rate caps. ARMs can make sense if you'll move or refinance before the fixed period ends; otherwise a rising rate can raise your payment sharply.
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