An ARM is an adjustable rate mortgage. The interest rate for an ARM varies over time. The initial interest rate is set below the market rate on a comparable fixed-rate loan, and then the rate changes. For example, you can get approved for a 1-year ARM that has a fixed interest rate for a year, then an adjustable rate for the remaining time of the loan.
Here is how you know if this is the right option for you:
You plan to move or refinance in the next few years.
You want to reduce the cost of the loan as much as possible.
You want the lowest rate available.