Advantages and Disadvantages of An Adjustable-rate Mortgage (ARM). An adjustable-rate mortgage (ARM) is a home mortgage whose rates of interest resets at routine intervals. - ARMs have low set rates of interest at their onset, but frequently become more costly after the rate begins fluctuating. - ARMs tend to work best for those who plan to sell the home before the loan's fixed-rate phase ends. Otherwise, they'll need to re-finance or be able to manage regular dives in payments. Advertisement: Shop Top Mortgage Rates A quicker course to financial liberty Your Path to Homeownership Personalized rates in minutes If you remain in the market for a home mortgage, one alternative you might encounter is a variable-rate mortgage. These home mortgages come with set rates of interest for an initial period, after which the rate goes up or down at routine intervals for the rest of the loan's term. While ARMs can be a more budget-friendly means to get into a home, they have some drawbacks. Here's how to understand if you ought to get an adjustable-rate home loan. Variable-rate mortgage advantages and disadvantages To decide if this type of home loan is best for you, think about these variable-rate mortgage (ARM) advantages and downsides. Pros of a variable-rate mortgage - Lower introductory rates: An ARM frequently includes a lower initial rates of interest than that of an equivalent fixed-rate home loan - at least for the loan's fixed-rate duration. If you're preparing to sell before the fixed duration is up, an ARM can conserve you a bundle on interest. - Lower initial month-to-month payments: A lower rate also suggests lower home loan payments (at least during the initial duration). You can use the cost savings on other housing costs or stash it away to put towards your future - and potentially greater - payments.