- An Adjustable Rate Mortgage (ARM) is a mortgage loan that does not charge a fixed rate of interest. The interest rate charged will change subject to several conditions -- which means the required loan payment will also change. Adjustable rate mortgage loans can offer lower starting interest rates than fixed-rate loans, which translates into immediate savings on interest costs. To many buyers however, the lower interest rate of an ARM loan can also increase purchasing power. By utilizing the increased buying power of an ARM loan, the buyer does give up the security of having the same mortgage payment every year. The number of times your payment can change depends on the type of ARM loan you choose.
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