FIXED ADJUSTABLE RATE MORTGAGES (ARMs):

These loans generally begin with an interest rate that is below a comparable fixed rate mortgage, which could allow you to buy a more expensive home.

These are mortgages that combine aspects of fixed and adjustable rate mortgages, starting at a lower fixed rate for three, five, seven and ten years. e.g.-If you have an interest rate of 6.0% on a 7 year Fixed ARM then the rate will be the same for the first seven years. After the seven years is up then the rate will adjust per its terms and can increase or decrease depending on current market conditions.