• Adjustable Rate Hybrid Mortgages (ARM) offer an initial fixed rate for a set number of years, after which the interest rate is adjusted annually.
  • When hybrid ARMs become variable, they will be adjusted on a regular basis, usually every year.
  • Homeowners usually get lower mortgage payments during the initial period, but may lose out if interest rates rise after the fixed period.
  • The most popular type of hybrid ARM is the 5/1, which has a fixed initial 5-year term followed by yearly variable rate adjustments.