Monthly payments that may change periodically
Refinancing to an adjustable-rate mortgage (ARM) typically provides a lower interest rate for an initial payment period, making the initial monthly payments less than what a fixed-rate mortgage refinance usually offers. However, your interest rate may change periodically depending on changes in a corresponding financial index that's associated with the loan. Generally speaking, your monthly payment will increase or decrease if the index rate goes up or down.
ARM loans are usually named by the length of time the interest rate remains fixed and how often the interest rate is subject to adjustment thereafter. For example, in a 5/1 ARM, the 5 stands for an initial 5-year period during which the interest rate remains fixed while the 1 shows that the interest rate is subject to adjustment once per year thereafter.