Option ARM

Definition from Nolo’s Plain-English Law Dictionary

A type of adjustable rate mortgage that allows the borrower to choose the payment amount, each month, usually from the following four options: a minimum payment based on the borrower's initial interest rate, a payment that covers the interest that has accrued that month, a fully amortizing 30-year payment, or a fully amortizing 15-year payment.

Definition provided by Nolo’s Plain-English Law Dictionary.