Adjustable Rate Mortgages (ARMs), sometimes referred to as variable-rate mortgages, provide an alternative to the stability of fixed-rate mortgages. With ARMs, the interest rate fluctuates periodically, often annually, based on prevailing market conditions. Typically, ARMs offer lower initial interest rates compared to fixed-rate mortgages, making them attractive to borrowers seeking lower initial monthly payments. However, the interest rate adjustments are subject to periodic caps and lifetime limits to prevent drastic fluctuations, ensuring some degree of predictability. Borrowers considering ARMs should carefully assess their financial goals, as these mortgages can be advantageous in a rising-rate environment or for those who plan to move or refinance within a few years. It's essential for borrowers to understand the terms and risks associated with ARMs to make informed decisions about their home financing.