Finance
Which type of mortgage features a fixed interest rate for an initial period, then adjusts periodically based on an index?
AFixed-rate mortgage
BAdjustable-rate mortgage (ARM)✓ Correct
CBalloon mortgage
DReverse mortgage
Explanation
An adjustable-rate mortgage (ARM) typically features a fixed interest rate for an initial period (e.g., 5 years), then adjusts periodically based on a market index such as SOFR. ARMs often have caps limiting how much the rate can change per adjustment and over the life of the loan.
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