Finance
In South Carolina, which of the following correctly describes an 'interest rate cap' on an ARM?
AThe maximum loan amount a borrower can receive
BA limit on how much the interest rate can increase each adjustment period and over the loan's life✓ Correct
CThe minimum rate guaranteed for the loan
DThe rate the lender charges for processing
Explanation
Interest rate caps on ARMs limit how much the rate can change per adjustment period (periodic cap) and over the entire loan term (lifetime cap), protecting borrowers from extreme rate increases.
Related South Carolina Finance Questions
- The Truth in Lending Act (TILA) requires lenders to disclose the:
- In South Carolina, which of the following best describes 'seller financing'?
- Under the Home Mortgage Disclosure Act (HMDA), South Carolina lenders must:
- Which South Carolina lending law protects consumers from prepayment penalties and negative amortization in high-cost home loans?
- What is the primary purpose of the secondary mortgage market?
- 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 conventional conforming loan is one that:
- A South Carolina borrower's debt-to-income (DTI) ratio is used to:
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 →