Intermediate term Adjustable Rate Mortgages (ARMS) are fixed for the initial terms of typically 3, 5, 7 or 10 years. These ARMS are amortized over 30 years.  After the initial period, the loan will adjust monthly based on a predetermined index and margin. Interest rate adjustments are capped for each adjustment period as well as for the life of the loan. These programs are an excellent choice if you do not plan on being in your new home longer than the initial fixed period or if you predict that interest rates will be decreasing in the future. In addition, initial interest rates for these loans are typically lower than standard fixed rate programs, enabling you to qualify for a larger loan and/or enjoy a lower monthly mortgage payment.