Usually lenders charge points for the cost of giving you a mortgage loan. Payments are stable but initial rates tend to be higher than adjustable rate loans and often cannot be assumed by a subsequent buyer. This is a loan which must be paid off after a certain period. The advantage they offer is an interest rate that is lower than a mortgage that is made for 30 years. Interest rates can change monthly, annually, or every 3 or 5 years.
Some ARMs have a cap on the interest rate increase, to protect the borrower.
The length of time between interest rate changes. The limit on how much an interest rate or monthly payment can change at each adjustment or over the life of the loan. A provision in some loans that enables you to change an ARM to a fixed rate loan, usually after the first adjustment period. This may require additional fees. A measure of interest rate changes used to determine changes in the loan's interest rate over the term of the loan.