Many lenders are offering a
type of Adjustable Rate Mortgage which will allow the buyers to convert their
ARM to a fixed-rate mortgage without the expense of refinancing. There are
several variations of this type of loan, so you should be informed about the
various options before you decide on a loan.
Each lender places restrictions on when the ARM
can be converted to a fixed-rate loan. Some allow a conversion after the first
year of the mortgage, while others allow a change only on the rate adjustment
dates. There is usually a fee for converting the mortgage, but it is much less
than the cost of refinancing. The rate that you will pay after the conversion
may be slightly higher than the going rate for fixed-rate mortgages. A Realtor
can provide you with a list of lenders who offer convertible ARMs, so that you
can shop for the one that's best for you.