What is a distinguishing feature of an adjustable rate mortgage?

An adjustable rate mortgage (ARM) is characterized by an interest rate that is not fixed over the life of the loan but instead varies according to a specified financial index. This means that the interest payments can increase or decrease at scheduled intervals, depending on the fluctuations of that index. The initial rate may often be lower than that of a fixed-rate mortgage, which can make ARMs an attractive option for some borrowers, particularly if they expect that interest rates will remain low or decline.

The other options are not applicable to adjustable rate mortgages. For instance, a fixed interest rate for its entire duration would describe a fixed-rate mortgage rather than an ARM. The requirement for payments to be made at irregular intervals is typically not associated with either type of mortgage; payments on ARMs are usually made monthly, just like fixed-rate mortgages. Lastly, while some loans may not require a credit check, most lenders require a credit assessment for all mortgage products, including ARMs, to evaluate the borrower's creditworthiness.