Watching the market is important for those that are interested in an Adjustable-Rate Mortgages (ARM). With an ARM, the monthly mortgage payment will normally be lower during the initial period of the mortgage, with the benefit of an initial lower interest rate. However, the monthly payment could increase down the road due to market conditions. Generally, if rates go up, your monthly payments will increase and vice versa - if rates fall, your payment will decrease. Crunch the numbers so that you understand the implication under different market scenarios.