Finance
A graduated payment mortgage (GPM) features:
AFixed payments throughout the loan term
BPayments that start low and increase gradually over time✓ Correct
CPayments that decrease as equity increases
DVariable interest rates tied to a market index
Explanation
A GPM has lower initial payments that increase gradually over a set period before leveling off. It is designed for borrowers who expect their income to increase over time. Early low payments may cause negative amortization.
Related Arkansas Finance Questions
- The loan-to-value ratio (LTV) is calculated as:
- Arkansas is a 'lien theory' state. This means that when a borrower takes out a mortgage:
- Which type of loan is backed by the full faith and credit of the U.S. government and is designed to help veterans purchase homes?
- Which federal law prohibits certain loan terms such as prepayment penalties and balloon payments on high-cost mortgage loans?
- A borrower's debt-to-income (DTI) ratio is calculated by dividing:
- A conventional loan is best described as a mortgage that is:
- The process of gradually reducing a loan balance through regular principal and interest payments is called:
- Under the Truth in Lending Act (TILA), the Annual Percentage Rate (APR) reflects:
Practice More Arkansas Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Arkansas Quiz →