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Mortgage Glossary<\/h1>\n

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Whether you\u2019re a first-time homebuyer or a third-time refinancer, you\u2019re likely to come across some terms in your home loan process that need clarification. We think jargon has no place in the homeownership journey<\/a>, so we created this helpful glossary to fill you in on every term you need to know\u2014from covering what a real estate agent actually does, to what closing means, and more.<\/p>\n

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Adjustable-rate mortgage (ARM)<\/h3><\/div><\/div>

An adjustable-rate mortgage (ARM) is a loan that offers an initial period of fixed interest that then resets at a specified interval. Typically, you'll see an ARM expressed as two numbers. For example, a 5\/1 ARM has a fixed interest rate for the first 5 years that then adjusts based on market rates every year after that. An ARM tends to have a lower initial interest rate than a fixed-rate mortgage. However, it does come with a certain amount of unpredictability. That's because when an ARM enters its adjustable period, its interest rate may trend up or down depending on the state of the market.\r\n