A 'teaser rate' on an ARM loan refers to:
Why An artificially low initial interest rate offered for a limited period to attract borrowers Is Correct
Answer B: An artificially low initial interest rate offered for a limited period to attract borrowers
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
People Also Study
Related Alabama Questions
- In Alabama, which type of loan has an interest rate that changes periodically based on a market index?Finance
- A loan in which the interest rate changes periodically based on an index is called a(n):Finance
- An interest rate cap on an ARM loan limits:Finance
- The interest rate is 6.5% annually. A $165,000 loan has been outstanding for one year. How much interest accrued?Real Estate Math
- A loan officer who guarantees a buyer a specific interest rate for 60 days is offering a:Finance
Key Terms to Know
A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Math Concepts
Study This Topic
Practice More Alabama Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Alabama Quiz →