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An Adjustable Rate Mortgage, or ARM for short, is a loan with a mortgage rate that adjusts annually depending on market conditions. Typically, these types of mortgages have a fixed rate for a specified amount of time which is then followed by an adjustment period. In the adjustment period, the rate changes according to market conditions. For example, an ARM may feature an interest rate that is fixed for the first 10 years on a 30-year loan.