An Adjustable-Rate Mortgage (ARM) is a type of home loan where the interest rate can change over time. Initially, ARMs often have a lower fixed rate for a set period, such as 5, 7, or 10 years. After this period, the rate adjusts periodically based on market conditions, which can lead to lower payments initially but potentially higher costs later. The adjustments are typically tied to a specific index, such as the London Interbank Offered Rate (LIBOR) or the Constant Maturity Treasury (CMT) rate. Borrowers should understand the terms, including how often rates adjust and the maximum increase allowed, to make informed decisions.