Finance
In NJ, when an ARM (adjustable-rate mortgage) is at its annual or lifetime cap, it means the interest rate:
ACan rise or fall without limit
BCannot increase beyond the specified periodic cap or lifetime cap, protecting the borrower from unlimited payment increases✓ Correct
CIs fixed for the remainder of the loan
DMust be refinanced immediately
Explanation
ARM interest rate caps limit how much the rate can adjust per period (periodic cap) and over the life of the loan (lifetime cap), providing borrowers with protection against unlimited interest rate and payment increases.
Related New Jersey Finance Questions
- Under RESPA, the three-day right of rescission applies to:
- A NJ 'jumbo' mortgage loan is one that:
- The secondary mortgage market primarily functions to:
- A New Jersey 'purchase money mortgage' (PMM) is one where:
- Under RESPA, the Loan Estimate must be provided to a mortgage applicant within:
- Which type of NJ mortgage requires the borrower to make interest-only payments for a period, followed by full amortizing payments?
- An escrow account for property taxes and insurance on a NJ mortgage is also called:
- The front-end ratio (housing expense ratio) used by lenders compares:
Practice More New Jersey Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free New Jersey Quiz →