Definition: In common residential mortgage terminology, an adjustable-rate loan with a contractual option to convert to a fixed rate under specified conditions.
Example
A borrower exercises an available conversion option during the period stated in the loan documents.
Keep the distinction clear
Conversion is not necessarily available on every ARM or at any chosen rate. Fees, timing, and the method for setting the fixed rate depend on the contract.
Related terms
Adjustable-Rate Mortgage (ARM) · Index Rate (ARM) · Margin (ARM)
Keep studying
Mortgages: Borrower, Lender, Ownership, and Key Clauses
References: California DRE: real estate glossary · CFPB: mortgage key terms
Pronunciation (US): kun-VUR-tuh-bul MOR-gij (capitals show stress)
Pronunciation reference: Merriam-Webster
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