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What is an ARM Prepayment or Conversion?

April 26, 2017arm conversion prepayment

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What is an ARM Prepayment or Conversion?

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Prepayment is the payment of all or part of the mortgage debt before it is due. Some loan agreements may require you to pay special fees or penalties if you pay off the ARM early. Please review your loan documents for detailed information regarding prepayment of your ARM. Conversion is the provision in some ARMs that allows you to change the ARM to a fixed-rate loan at some point during the term of your loan. If you do convert your ARM, the new interest rate may be higher. Please review your loan documents for specifics.