Finance
What is a teaser rate in an adjustable-rate mortgage in Nevada?
AA rate that increases annually at a predetermined schedule
BAn artificially low introductory interest rate that rises to market rate after an initial period✓ Correct
CA fixed rate guaranteed by the lender for the full term
DA rate set below the federal funds rate
Explanation
A teaser rate is an artificially low introductory rate on an ARM, designed to attract borrowers. After the initial period (e.
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Key Terms to Know
Adjustable-Rate Mortgage (ARM)
A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
Math Concepts
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