Adjustable rate mortgages (ARMs) generally start out with an interest rate lower than a fixed rate loan. This saves you money early on, and may help you qualify for a more expensive home. However, your rate is tied to a market index. As the index goes up or down, your interest rate and payments will also change at each scheduled adjustment period. "Rate caps" limit the amount your interest rate can change.
Pages on the site that discuss adjustable rate mortgages
Fixed vs. adjustable
purchase
> homebuyer's guide
> step 2
Fixed vs. adjustable
refinance
> refinancing guide
