A convertible mortgage allows the borrower to start with an ARM but includes a feature allowing a switch or conversion to a fixed rate at a later date.

The convertible option combines the advantage of qualifying at a lower ARM rate but includes the opportunity to still get the long term fixed rate without the expense and time of a refinance.

The other kind of convertible mortgage is a fixed rate loan with rate reduction option. If rates had dropped since the time of closing it allows you, under some prescribed conditions, for small conversion fee to adjust your mortgage to going market rate. Generally the interest rate or discount points may be a little higher for a convertible loan.

Most investors have limited the availability of these mortgages.  Presently, Micott Mortgage can not recommend any programs of this nature.

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