Convertible ARMs start as ARMs but have an option to convert to a fixed loan if you see interest rates starting to rise. The conversion is typically done for a nominal fee and requires almost no paperwork. The disadvantage is that the conversion interest rate is typically a little higher than the market rate at that time. In other words, if you were to refinance into a fixed loan rather than convert, you would get a better rate. In order to decide, look at the difference in monthly payments, what it would cost to refinance vs convert, and see how long the better rate takes to pay off the additional fees (and aggravation of refinancing). Then look at how long you plan on living in the house...