Interest rates for these kind of loans tend to be far lower than the fixed-rate mortgage, but this rate adjusts at predetermined times over the years.
In the early years, borrowers can take advantage of the lower rate to purchase a larger home, and enjoy lower payments. Over time, this rate will adjust, going higher or lower, depending on the current market.
You may be able to find a Hybrid ARM, in which the interest rate is fixed for many years, then later adjusts only once for the remainder of the term. Your loan officer can help you choose the best loan for your own situation.
The Federal Reserve Board has a helpful document that explains the basics of Adjustable Rate Mortgages:
Consumer Handbook on Adjustable-Rate Mortgages.pdf (707.82 kb)
Adjustable Rate Mortgages - HTML Version