Finance
An adjustable-rate mortgage (ARM) has a 2/1 buydown structure. This means:
AThe rate is fixed for 2 years then adjusts annually
BThe rate is reduced 2% in year 1 and 1% in year 2 before rising to the note rate✓ Correct
CThe borrower makes 2 extra payments per year
DThe lender charges 2 points upfront and 1 point at closing
Explanation
A 2/1 buydown temporarily reduces the interest rate — 2% below the note rate in year 1 and 1% below in year 2 — before rising to the full note rate in year 3 and remaining there.
Related New Hampshire Finance Questions
- A NH lender who approves a loan but requires the borrower to escrow for property taxes and insurance is doing so because:
- A VA loan benefit available to eligible New Hampshire veterans includes:
- Which government-sponsored enterprise (GSE) purchases conventional conforming mortgages in the secondary market?
- A discount point on a New Hampshire mortgage loan equals:
- What is the debt-to-income (DTI) ratio a lender uses to qualify a borrower?
- New Hampshire does NOT have which of the following taxes?
- New Hampshire has no state sales tax, which affects real estate transactions in that:
- An adjustable-rate mortgage (ARM) in New Hampshire typically features:
Practice More New Hampshire Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free New Hampshire Quiz →