text: real estate? what does arm mean and how does it affect the cost of buying a house? this is a mortgage question.  an arm refers to your loan term and is defined as adjsutable rate mortgage. it indicates that the loan's rate is not fixed and can change. the rate art which it changes depends on the type of loan. some have short term fixed periods and then convert to adjustable.   there is a right and a wrong time for these. as a general rule, these are for short term options...5 years or less. meaning, if you think you will move or want to refinance, or could have a better credit position in less than 5 years...then an arm makes sense.  i write a blog on the subject of credit management, mortgages, real estate trends, etc. check it out for more information that may be helpful.