Finance
A 5/1 adjustable-rate mortgage (ARM) means:
AThe loan is fixed for 5 months then adjusts every year
BThe rate is fixed for the first 5 years, then adjusts annually✓ Correct
CThe rate adjusts every 5 years over a 1-year period
DThe loan has 5 possible rate adjustments over its life
Explanation
A 5/1 ARM has a fixed interest rate for the first 5 years, after which it adjusts annually. The index (such as SOFR) plus a margin determines the new rate at each adjustment, subject to any periodic and lifetime caps.
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