Finance
An adjustable-rate mortgage (ARM) is characterized by:
AA fixed rate for the entire loan term
BAn interest rate that changes periodically based on a market index after an initial fixed period✓ Correct
CMonthly payments that decrease over time
DA rate that adjusts only once at the end of the loan term
Explanation
An ARM has an initial fixed-rate period followed by periodic adjustments tied to a market index (such as SOFR or the 1-year Treasury). Caps limit how much the rate can change per period and over the life of the loan.
Related Massachusetts Finance Questions
- A 'due-on-sale' clause in a mortgage requires:
- A Massachusetts condominium buyer's monthly PITI payment includes all of the following EXCEPT:
- In Massachusetts, a 'negative amortization' loan is one where:
- The Massachusetts Homeownership Opportunity Program (MassHousing) primarily serves:
- A Massachusetts adjustable-rate mortgage (ARM) adjusts its interest rate based on:
- Under RESPA, a mortgage lender cannot do which of the following?
- A Massachusetts mortgage lender is required to give the borrower a Loan Estimate within how many business days of receiving the loan application?
- Under the Massachusetts Consumer Credit Cost Disclosure Act, lenders must disclose the Annual Percentage Rate (APR). The APR is higher than the note rate because:
Practice More Massachusetts Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Massachusetts Quiz →