Finance
An adjustable-rate mortgage (ARM) initial rate period is followed by adjustment periods. What limits how much the rate can change at each adjustment?
AFederal Reserve regulations
BPeriodic rate caps (and lifetime caps) written into the loan agreement✓ Correct
CNMREC rules
DFannie Mae guidelines only
Explanation
ARMs have periodic caps (limit on rate change at each adjustment), lifetime caps (maximum rate over loan life), and initial caps (maximum change at first adjustment) built into the loan documents.
Related New Mexico Finance Questions
- In New Mexico, a 'bridge loan' is used when a buyer needs to:
- In New Mexico, 'mortgage insurance premium' (MIP) on FHA loans differs from PMI in that:
- In New Mexico, the 'three-day right of rescission' under TILA does NOT apply to:
- In New Mexico, a 'purchase money mortgage' (PMM) occurs when:
- The annual percentage rate (APR) on a mortgage loan differs from the interest rate because the APR includes:
- A New Mexico buyer puts 10% down on a $300,000 home. What is the loan-to-value ratio?
- A buyer in New Mexico pays 2 discount points on a $280,000 loan. How much do the points cost?
- A buyer obtains a $250,000 mortgage at 6% annual interest. What is the first month's interest payment?
Practice More New Mexico Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free New Mexico Quiz →