Finance
A mortgage that includes only interest payments for the first 5 years and then adjusts to amortizing payments is called:
AA balloon mortgage
BAn interest-only ARM (adjustable-rate mortgage)✓ Correct
CA bi-weekly mortgage
DA graduated payment mortgage
Explanation
An interest-only ARM has a period (often 5-10 years) during which only interest is paid, keeping payments low. After this period, the loan resets to fully amortizing payments on the remaining balance, which can cause a significant payment increase (payment shock).
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