An adjustable loan is a common type of home loan. The homeowner’s interest rate and payments can change to reflect the current changes of the market but the fluctuation in the loan will probably not be noticeable right away.
Many investment companies will allow buyers to have a certain amount of time at the beginning of the loan to remain fixed, both payment and rate. During this time, the rate will be a ‘teaser’ low rate.
Those best suited for this type of loan are expecting an increase in incomes to accommodate the increasing payment and interest rates. Or they may not expect to reside in the property for a long time.