A loan with a fixed rate at the start that will adjust regularly after a certain period is commonly referred to as a?

A loan characterized by a fixed interest rate for an initial period that later adjusts periodically is known as a Hybrid ARM (Adjustable Rate Mortgage). The key feature of a Hybrid ARM is that it combines elements of both fixed-rate and adjustable-rate loans. During the fixed-rate phase, borrowers benefit from predictable monthly payments, offering stability in cash flow and budgeting. After this initial period, the interest rate adjusts according to a specified index, which may lead to changes in the monthly payments based on market conditions.

This design makes Hybrid ARMs appealing to borrowers who may plan to remain in their home only for a few years before selling or refinancing, allowing them to take advantage of the lower fixed rate initially while having the potential for adjustments later that could be beneficial if rates remain stable or decrease. This option provides a degree of flexibility and is often seen in loans that may fit variable personal finance strategies.