Arm

A mortgage in which the interest rate is set regularly based on an index.

ARM's come in different types, typically 3,5,7, 10 year. The shorter the term, the lower the interest rate. The rate you get is fixed for the term of the arm, thus a 5 year ARM gives you a fixed rate for 5 years. At the end of the 5th year your rate could go up or down depending on the current market rate.

They typically go up a point a year but most generally they are not good if you are going to be staying in your home a long time.