The convertible mortgage instrument (CMI) starts out with an adjustable interest rate, but later the home buyer can switch to a fixed-rate mortgage if interest rates look more favorable. However, some loan contracts carry a mandatory holding period before conversion to a fixed-rate loan is permitted and also prohibit switching after a certain length of time has elapsed (such as five years).

Question

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A convertible mortgage instrument indeed starts with an adjustable interest rate and offers the option to switch to a fixed-rate mortgage under certain conditions, including potential restrictions on when the conversion can occur, such as mandatory holding periods or cut-off times for conversion eligibility.

The Convertible Mortgage Instrument (CMI) Starts Out with an Adjustable