Finance
An adjustable-rate mortgage (ARM) in Alaska typically includes a 'cap' structure. The periodic cap limits:
AThe total loan amount
BThe number of payment changes per year
CHow much the interest rate can change at any single adjustment✓ Correct
DThe maximum loan-to-value ratio
Explanation
The periodic (or adjustment) cap on an ARM limits how much the interest rate can change at any single adjustment period (e.g., no more than 2% per year). There is also a lifetime cap that limits the total change over the life of the loan.
Related Alaska Finance Questions
- An adjustable-rate mortgage (ARM) in Alaska has an initial rate of 4% and caps at 2% per year. If rates rise, the maximum rate increase in one year is:
- Under Alaska law, foreclosure of a mortgage may occur through which process?
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- What is the primary advantage of a 15-year mortgage compared to a 30-year mortgage at the same interest rate?
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