Finance
A South Carolina buyer is offered a 30-year fixed mortgage at 7% or a 5/1 ARM at 5.5% with annual adjustments capped at 2%/yr. The ARM is most beneficial when:
AThe buyer plans to stay in the home for 30 years
BThe buyer plans to sell or refinance within 5 years✓ Correct
CInterest rates are expected to rise significantly
DThe buyer has a fixed income
Explanation
ARMs offer lower initial rates and are most advantageous when the buyer plans to sell or refinance before the adjustment period begins, avoiding the risk of rate increases.
Related South Carolina Finance Questions
- What is the secondary mortgage market's primary function in South Carolina real estate financing?
- In South Carolina, which of the following best describes 'seller financing'?
- What is the maximum FHA loan limit in high-cost areas for a single-family home (as of recent years)?
- In South Carolina, what is a 'balloon payment' mortgage?
- A South Carolina buyer's debt-to-income ratio is 45%. Most conventional lenders will:
- In South Carolina, a 'purchase money second mortgage' is created when:
- In South Carolina, a lender who makes a mortgage loan with an interest rate more than 8 points above the prime rate may be required to comply with:
- A South Carolina buyer uses a 'piggyback loan' (80-10-10 structure). This means they:
Practice More South Carolina Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free South Carolina Quiz →