how hybrid arms are structured
hybrid adjustable rate mortgages may be set with fixed rate intervals of three five seven or 10 years with the adjustable rate triggered on the reset date after the reset date has been reached the interest rate on the mortgage is typically assessed and recalculated on an annual basis long term fixed rate mortgages especially those with a 30 year period can see low interest rates that are competitive hybrid arms offer homebuyers options that may be more suitable for their needs for instance some homeowners do not remain in their residences for 30 years making it more attractive to pursue a mortgage that offers interest rates that better suit the time frame they expect to hold the property with a hybrid arm a margin is added to a benchmark interest rate to determine the new reset there are a variety of benchmarks for the adjustable rate period of the mortgage a floor will be set to determine the absolute lowest rate at which the loan s interest rate can be adjusted for instance the lender might stipulate that the interest rate cannot fall below its stated margin the calculation of the new adjustable rate can include a lookback period where the lender at the reset date refers to the index within the lookback period the length of this period can vary by lender and could be set around 45 days 