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What does a step loan mean in a loan modification?

In: Personal Finance, Loans, Home Equity and Refinancing, Foreclosure, Real Estate, Money Management [Edit categories]

Answer:

A "step-rate" modification states that you will have a changing interest rate. For example, the first 5 years, your interest rate will be 2%, the 6th year will be at 3% and beginning the 7th year, you'll pay a fixed interest rate of 4%.

Step rate modifications always become fixed rates in time (normally after 5 years)

First answer by Chris0408. Last edit by Chris0408. Contributor trust: 1 [recommend contributor ]. Question popularity: 9 [recommend question].

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