What is a Convertible ARM?
The convertible ARM is a type of adjustable rate mortgage that allows for the conversion to a fixed rate of interest at specific points during the life of the mortgage. In general, the conversion of an ARM cannot take place until the mortgage has been in place and has been kept current for at least thirteen months from the date of issue. Often, the terms and conditions defined in a convertible ARM will not allow the conversion to take place until at least three calendar years have passed since the mortgage went into effect. One of the main benefits to going with a convertible ARM is that the borrower may be able to take advantage of a better interest rate at some future point. Since interest rates can and do fluctuate over time, it is possible that the borrower may be able to enjoy a period of several years where the applied interest rate is very favorable in comparison to the fixed rate that was available at the time the mortgage agreement was drafted. When this type of situation exis
