What is an ARM loan and when does it make sense in Washington?

An Adjustable-Rate Mortgage (ARM) offers a fixed rate for an initial period — typically 5, 7, or 10 years — then adjusts annually based on a benchmark index plus a margin. In Washington, a 7/1 or 10/1 ARM can make sense if you plan to sell or refinance before the fixed period ends, or if you're confident rates will drop. The lower initial rate means a lower payment during the fixed window. The risk is that rates may rise after adjustment if you're still in the loan.