two-step mortgage

Dictionary of Banking Terms for: two-step mortgage
two-step mortgage

type of fixed-rate, 30-year mortgage, that adjusts the borrower’s interest rate after an initial five or seven year period. The borrower pays less principal in the early years of the mortgage. After five years have passed (seven years in some loans), the mortgage interest rate is adjusted to the prevailing fixed-rate mortgage for the remainder of the mortgage.

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