Finance
In Tennessee, a mortgage that allows the borrower to convert from an adjustable rate to a fixed rate at specified intervals is called a:
ABalloon mortgage
BConvertible ARM✓ Correct
CWraparound mortgage
DBridge loan
Explanation
A convertible ARM allows the borrower to convert from an adjustable rate to a fixed rate at specified intervals (e.g.
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Key Terms to Know
Adjustable-Rate Mortgage (ARM)
A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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