what are the risks to a hybrid arm 
if the borrower can t afford the new rate following the reset they may default on the payments also if the borrower plans to sell the home following the reset and the property value has decreased the borrower may take a loss on the sale if the home s value is less than the amount owed on the loan the bottom linehybrid adjustable rate mortgages arms offer a fixed rate during the initial introductory period which is usually a set number of years following the initial period the interest rate on the loan adjusts annually based on the market or a benchmark as a result the adjusted rate can be significantly higher than the initial fixed rate the benefits to the borrower include a low monthly mortgage payment during the introductory period however the drawback of a hybrid arm is the reset feature can lead to an interest rate that s much higher than the initial rate for this reason borrowers may often try to refinance the mortgage to avoid a higher rate following the reset 