A convertible adjustable-rate mortgage is a hybrid home loan designed to give borrowers the best possible interest rate. Borrowers can take advantage of low initial interest rates with an adjustable-rate loan. Convertible adjustable-rate loans allow the option to switch to a fixed-rate loan within a predefined period of time, usually between the second and fifth year of the loan. Unlike a traditional loan, a convertible adjustable-rate mortgage can be converted to a fixed-rate mortgage without refinancing the loan. Borrowers who opt for a convertible adjustable-rate mortgage while rates are high can save a significant amount of money if rates decrease during their conversion period. Another advantage is that homeowners do not need to qualify for a new loan to convert as they would with a traditional refinance. There are usually fees involved in convertible adjustable-rate mortgages. A service fee is typically charged to convert from an adjustable to a fixed-rate loan.