An adjustable-rate mortgage (ARM), also known as a variable-rate mortgage or tracker mortgage, is a type of home loan where the interest rate periodically adjusts based on an index that reflects the cost to the lender of borrowing on the credit markets. Here are some key features of an ARM:

• The interest rate on an ARM adjusts periodically, typically once a year, based on changes in the index rate.
• ARMs usually have a lower initial interest rate than fixed-rate mortgages, making them a good option if you want to get the lowest possible mortgage rate starting out.
• After the initial period, the interest rate and monthly payment can fluctuate periodically, making it difficult to factor into your budget.
• ARMs usually have caps that limit how much the interest rate and/or payments can rise per year or over the lifetime of the loan.
• ARMs can be the right move for borrowers hoping to enjoy the lowest possible interest rate.

Its important to note that ARMs can be more complex than fixed-rate mortgages and involve more risk. They are sometimes sold to consumers who are unlikely to repay the loan should interest rates rise, and extreme cases are characterized as predatory loans. However, ARMs can also be a good option for borrowers who plan to sell their home within a short period of time or who are confident they can afford increases in their monthly payment.