Finance
What is the 'prime rate' and how does it relate to Hawaii real estate loans?
AA. The rate charged on FHA loans regardless of creditworthiness
BB. The benchmark interest rate at which commercial banks lend to their most creditworthy customers; many adjustable-rate products are indexed to it✓ Correct
CC. Hawaii's mandated maximum mortgage interest rate
DD. The Federal Reserve's overnight lending rate between banks
Explanation
The prime rate is the base rate banks use for their most creditworthy borrowers. Many home equity lines of credit (HELOCs) and some ARMs are tied to the prime rate.
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