Finance
An adjustable-rate mortgage (ARM) has an initial rate of 4.5% with a 2/2/6 cap structure. This means the rate can increase a maximum of:
A2% per adjustment, 2% lifetime
B2% at first adjustment, 2% per subsequent adjustment, 6% lifetime✓ Correct
C6% at first adjustment only
D2% total over the life of the loan
Explanation
A 2/2/6 ARM cap structure means: 2% maximum increase at the first adjustment, 2% maximum at each subsequent adjustment, and 6% maximum increase over the life of the loan.
Related Arizona Finance Questions
- In Arizona, seller-paid closing costs (concessions) on a conventional loan are limited to a percentage of the purchase price based on the buyer's LTV. For LTVs greater than 90%, the maximum seller contribution is:
- A reverse mortgage in Arizona is available to homeowners who are:
- What does LTV stand for in mortgage lending?
- A buyer in Arizona assumes an existing mortgage. If the assumption is 'qualified,' this means:
- Under a deed of trust in Arizona, who holds legal title to the property during the loan period?
- Which federal law requires lenders to provide borrowers with a Loan Estimate within 3 business days of receiving a loan application?
- Which type of mortgage index is commonly used for ARM loans?
- In Arizona, a 'buydown' mortgage involves:
Practice More Arizona Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Arizona Quiz →