Final answer:
An adjustable-rate mortgage (ARM) is a type of loan where the interest rate varies with market interest rates.
Step-by-step explanation:
An adjustable-rate mortgage (ARM) is a type of loan that a borrower uses to purchase a home in which the interest rate varies with market interest rates. This means that the interest rate can change over time, based on fluctuations in the market. With an ARM, the lender has the ability to change the interest rate, which can result in changes to the monthly payment amount. This type of loan is different from a fixed-rate mortgage, where the interest rate remains the same for the entire duration of the loan.