Finance
A Connecticut lender offers a 5/1 ARM. '5/1' means:
A5% interest rate for 1 year
BThe rate is fixed for 5 years, then adjusts every 1 year thereafter✓ Correct
C5 points and 1% origination fee
D5 year term with 1 balloon payment
Explanation
A 5/1 ARM has a fixed interest rate for the first 5 years, after which it adjusts every 1 year based on a financial index plus a margin. The '5' is the initial fixed period; the '1' is the adjustment interval.
Related Connecticut Finance Questions
- The primary market in mortgage financing refers to:
- Which of the following documents creates a borrower's personal obligation to repay a mortgage loan?
- The interest rate on an adjustable-rate mortgage (ARM) is tied to a:
- Under the Home Mortgage Disclosure Act (HMDA), Connecticut mortgage lenders are required to:
- A Connecticut buyer's loan falls through 2 days before closing due to a last-minute job loss discovered by the lender. The purchase contract has a financing contingency that has already been removed. What can the buyer do?
- A Connecticut buyer is considering an adjustable-rate mortgage (ARM). Which statement is TRUE about ARMs?
- A Connecticut borrower's front-end (housing) debt-to-income ratio is calculated by dividing:
- A Connecticut homeowner wants to access their home equity without selling or taking out a traditional loan. The best option that provides a revolving line of credit is:
Practice More Connecticut Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Connecticut Quiz →