Adjustable-rate mortgage (ARM)
An adjustable-rate mortgage (ARM) has an interest rate that changes at a set future date, usually after one, three or five years. The starting rate is usually lower than a fixed rate, but you take the risk it goes up.
New Jersey example
Say a made-up ARM on a Montclair condo starts at 5.75% and first adjusts after five years. At that point the new rate is an index plus a margin. If the index is 4.00% and the margin is 2.75%, the rate becomes 6.75%, subject to any caps in the loan.
Official source
This is a plain-English summary. Rules and dollar amounts change, so check the official source or a professional before you file or sign anything.