Hybrid adjustable rate mortgages (ARM) generally have a fixed term / variable term such as 5/1 ARM.

  • 5 would be 5 years at the fixed teaser rate.
  • 1 would mean it adjusts ever 1 year after the initial 5 years is over.

Once the adjustment period starts, the new rate will be based on an index plus a percentage called the margin. Look for 2.5% margin or lower on 1 year ARM adjustments.


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