Finance
An adjustable-rate mortgage (ARM) typically has a lower initial interest rate than a fixed-rate mortgage because:
AThe lender charges fewer fees on ARMs
BThe borrower assumes the risk of future rate increases✓ Correct
CThe government subsidizes ARM loans
DARMs are only available to high-income borrowers
Explanation
ARMs transfer interest rate risk to the borrower: if rates rise, the borrower's payment increases. In exchange for taking on this risk, borrowers receive a lower initial rate.
Related Nebraska Finance Questions
- A Nebraska conventional loan applicant has a debt-to-income ratio of 50%. Most conventional lenders will:
- An interest rate 'cap' on an adjustable-rate mortgage (ARM) in Nebraska limits:
- The Equal Credit Opportunity Act (ECOA) prohibits lenders from discriminating in credit decisions based on:
- A 'due diligence period' in a Nebraska commercial real estate purchase allows the buyer to:
- Nebraska law requires lenders to provide a good faith estimate of settlement costs under:
- A USDA Rural Development loan in Nebraska would be appropriate for a buyer purchasing a home in:
- A balloon mortgage is characterized by:
- A home equity line of credit (HELOC) is:
Practice More Nebraska Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Nebraska Quiz →