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An ARM (adjustable rate mortgage) is a loan type that allows the lender to adjust the interest rate during the term of the loan. Generally, these changes are determined by a margin and an index so that the interest rate changes (up or down) are based on market conditions at the time of the change. Most often a rate change cap and a lifetime cap limit these interest rate changes. Consumers who apply for adjustable rate mortgages are entitled to ARM Program Disclosures from the lender that spell out the terms of the loan. 

Mortgage Marvel mortgage calulators will show a fully-amortizing ARM, the most common type of ARM, where the monthly payment is sufficient to payoff the entire mortgage balance at the end of the term. The term is typically 30 years. After any initial, fixed interest rate period has passed, the interest rate and payment adjust at the frequency specified.

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