Adjustable Interest Rate (ARM) Loans

Examples: 7 year ARM, 5 year ARM, 3 year ARM, 1 year ARM, 7/1, 5/1, 3/1, 1/1

An adjustable rate mortgage (ARM) is a loan with an interest rate that can change, according to pre-set intervals designated by the bank. These loans are often used by people who will be in their homes for a short time.

Some ARM loans have an initial period when the interest rate is fixed (typically 2, 3, 5, 7,or 10 years). After the fixed period, the loan converts to an adjustable rate mortgage, or ARM. Other ARM loans are adjustable during the first year, with rate adjustments beginning after 1, 3, 6, or 12 months.

The amount of the adjustment depends on several factors, including the index, margin, payment caps, interim caps, and lifetime caps. These factors can be complex, so it’s important to speak with someone you can trust. We are happy to take the time to explain the opportunities and risks of an ARM with you.


  • ARMs often provide the lowest interest rate and lower monthly payment for a short period
  • Can refinance if interest rates drop
  • Rates and payments may go down if rates improve
  • May qualify for a higher loan amount than conventional mortgage


  • Interest rates can increase, sometimes significantly
  • Payments may increase over time

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ARMs are right for some borrowers but not for everyone. Call us at 443-398-0711 or click the button below for a free mortgage consultation, and we’ll be happy to help you determine if an ARM is right for you.

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