how a 5 6 hybrid adjustable rate mortgage arm works
a 5 6 hybrid arm starts with a fixed interest rate and then the interest rate becomes adjustable for the remaining years of the loan the adjustable rate is based on a benchmark index such as the prime rate the lender will also add additional percentage points known as a margin if the index is currently at 4 and the lender s margin is 3 then the fully indexed interest rate for the borrower will be 7 a 5 6 hybrid arm should have caps on how much the interest rate can rise over the life of the loan this offers protection against rising interest rates that could make the monthly mortgage payments unmanageable see our picks for best mortgage lenders 