Finance
A Mississippi buyer is obtaining an adjustable-rate mortgage with a 5/1 ARM structure. This means:
AThe rate is fixed for 1 year, then adjusts every 5 years
BThe rate is fixed for the first 5 years, then adjusts annually✓ Correct
CThe rate adjusts 5 times over the life of the loan
DThe rate cap is 5% with a 1% annual adjustment
Explanation
A 5/1 ARM has a fixed interest rate for the first 5 years, then adjusts annually based on the index and margin. The '5' refers to the initial fixed period; the '1' refers to the adjustment frequency after that.
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