Finance
A Connecticut buyer is considering an adjustable-rate mortgage (ARM). Which statement is TRUE about ARMs?
AThe interest rate never changes during the life of the loan
BThe interest rate adjusts periodically based on an index, potentially changing the monthly payment✓ Correct
CARMs always have lower total interest costs than fixed-rate mortgages
DARMs are not available for Connecticut residential properties
Explanation
An ARM has an interest rate that adjusts periodically (e.g., annually) based on a benchmark index (such as SOFR) plus a margin. This can cause monthly payments to increase or decrease over time.
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