Convertible ARM

Convertible ARM

Some variable rate loans come with options to convert them to a fixed rate loan based on a pre-determined formula, during a given time period. For example, the 1-year T-bill adjustable may be converted to a fixed during the first five years on the adjustment date. This means you could convert during the 13th, 25th, 37th, 49th and 61st months of the loan.