An ARM offers a fixed-rate of interest for a short period of time, usually three, five, or seven years. At that point, the interest rate may change up or down, depending upon the index to which the interest rate is tied. These loans also have limits as to how high the rate can change in a year, and in the life of the loan. The borrower may continue paying the loan at this variable or adjustable-rate, or may refinance the loan to a fixed-rate conventional mortgage.