An ARM can adjust its interest rate under the contract. A hybrid ARM begins with a specified fixed period: for example, a 5/1 has five initial fixed years followed by annual adjustments. Other structures differ. The index, margin, rounding, caps, floors and reset dates govern actual adjustments.
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Adjustable-rate mortgages (ARM)
A lower fixed rate for the first few years, then it adjusts — who this actually makes sense for.
By Lighthouse Companies, LLC · Updated · 2 min readLighthouse provides educational information, not a personal loan quote, lending decision, or legal or financial advice. Verify the figures against your documents and ask your lender, servicer, or a qualified professional about your circumstances.