Question 14
Which of the following statements is true of adjustable-rate mortgages?
There is no limit as the amount of payment change on an ARM.
The interest rate changes on ARMs are limited per year and per lifetime.
They cannot be converted to fixed-rate loans.
They generally carry higher initial interest rates than conventional mortgages.
Homework Answers
The adjustable-rate mortgage, or ARM, is a home loan with an interest rate that can change periodically. This means that the monthly payments can go up or down. Generally, the initial interest rate is lower than that of a comparable fixed-rate mortgage.
Answer - (B)
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