Convertible adjustable rate mortgage
1 answersQuestion asked ( August 19, 2009 , Shopping / Finance )
I currently have an adjustable rate mortgage for my house. I overhead my banker talk about convertible adjustable rate mortgage to another customer and got curious. Is this better than a normal arm? Can i use it effectively to lower my mortgage payments?
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Answer
A convertible ARM is only slightly different from a normal ARM. In a convertible ARM the applicant is provided with an option to convert the adjustable rate of his mortgage to a fixed rate during the tenure of the loan. These are typically offered by the lending institution / bank as an effective loan option to beat rising interest rates. Do keep in mind that these are not free of terms and conditions and may include certain fees associated with it to convert your convertible ARM to a fixed rate loan.
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