could be trapped in unaffordable rate hikes due to personal issues or market forces
there s also a chance that the interest rate might decrease lowering the borrower s monthly payments when it adjusts but in many cases the rate will rise increasing the borrower s monthly payments if a borrower takes out an arm with the intention of getting out of the mortgage by selling or refinancing before the rate resets then personal finances or market forces might trap them in the loan potentially subjecting them to a rate hike that they can t afford consumers considering an arm should educate themselves on how they work 5 1 hybrid arm vs fixed rate mortgagea 5 1 hybrid arm may be a good mortgage option for some homebuyers but for others a fixed rate mortgage may be more appropriate a fixed rate mortgage has one set interest rate for the life of the loan the rate is not tied to an underlying benchmark or index rate and doesn t change the interest rate charged on the first payment is the same interest that applies to the final payment 4a fixed rate mortgage could yield advantages for a certain type of homebuyer if you re interested in predictability and stability with mortgage rates for example then you might lean toward a fixed rate loan instead of a 5 1 hybrid arm comparing them side by side can make it easier to decide on a mortgage option 