Finance
In Michigan, which type of loan has its rate tied to an external index such as the SOFR (Secured Overnight Financing Rate)?
AFixed-rate conventional mortgage
BAdjustable-rate mortgage (ARM)✓ Correct
CFHA 30-year fixed loan
DUSDA Rural Development loan
Explanation
Adjustable-rate mortgages (ARMs) have interest rates tied to an external index (such as SOFR, formerly LIBOR). The rate adjusts periodically based on changes in the index plus a margin, which is why ARMs carry interest rate risk for borrowers.
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