The term "4/1" typically refers to a type of mortgage known as a 4/1 adjustable-rate mortgage (ARM). In this arrangement, the interest rate remains fixed for the first four years, after which it adjusts annually based on market conditions. This can provide lower initial payments compared to a traditional fixed-rate mortgage. After the initial fixed period, the interest rate may increase or decrease, affecting monthly payments. Borrowers should be aware of potential rate changes and how they could impact their finances over time. Understanding the terms of a 4/1 ARM is crucial for making informed decisions about home financing.