Arm Loans

An ARM is an adjustible rate mortgage loan that allows the lender to adjust the interest rate so it reflects fluctuations in the cost of money more accurately. With an ARM loan, the borrower is the one who is affected by interest rate movements, not the lender. If interest rates rise, the borrowers payments also go up and can go way up. If the rates fall, the borrowers monthly payments will drop along with the declining rates.

Adjustible Rate Mortgages are considered to be much riskier to the borrower. The lender prefers this type of loan because they pass the risk of rising rates onto the consumer.