Adjustable-rate mortgage
ARMWhat is adjustable-rate mortgage?
An ARM has a fixed introductory rate for a set period, then adjusts periodically against an index. Payments can rise or fall after the fixed period ends.
What it means in practice
A 7/6 ARM, for example, is fixed for seven years and then adjusts every six months, within caps on each adjustment and over the loan's life.
ARMs can suit a genuinely short expected stay, but the risk is that plans change and you are still holding the loan when it adjusts.
This calculator models constant rates only. It cannot forecast ARM or HELOC adjustments, and no honest calculator can.