28 September 2022

Convertible Adjustable Rate Mortgage (ARM)

A convertible adjustable rate mortgage (ARM) allows buyers to take advantage of low interest rates by receiving a loan at a “teaser” loan interest rate. Their monthly mortgage payment stays the same, but interest rates fluctuate, usually every six months.

The borrower has the option of converting their ARM to a fixed-rate mortgage, but there are generally fees for the switch.