Mortgage Dictionary
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Two-Step Mortgage
The two-step mortgage is a type of
adjustable-rate mortgage
(ARM) that "adjusts" one, and
only one, time. Typically, a two-step mortgage has one interest rate for the first
5, 7, or 10 years of loan and a different interest rate for the remainder of the
loan. The lender sometimes has the option to call the loan due with 30 days notice
prior to the adjustment.