Reduction-Option Loan (ROL)
Barron's Finance & Investment Dictionary:
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Reduction-Option Loan (ROL)
hybrid between a fixed-rate and adjustable mortgage and a cheaper alternative to refinancing, whereby the borrower has the one-time option from the second through the fifth year to match the current mortgage rate, which then becomes fixed for the rest of the term. The reduction is usually permitted if rates drop more than 2% in any one year.
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Barron's Finance & Investment Dictionary
Dictionary of Finance and Investment Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
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