Finance
Which type of mortgage loan has interest rate adjustments tied to a financial index?
AFixed-rate mortgage
BBalloon mortgage
CAdjustable-rate mortgage (ARM)✓ Correct
DReverse mortgage
Explanation
An adjustable-rate mortgage (ARM) has an interest rate that periodically adjusts based on a financial index (such as the SOFR or Treasury index) plus a margin. This means the borrower's payment can increase or decrease over time.
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