Finance
A Texas lender offers a 5/1 ARM with a 2/2/5 cap structure. This means the rate can increase by how much at the first adjustment?
AUp to 1% at first adjustment
BUp to 2% at first adjustment✓ Correct
CUp to 5% at first adjustment
DUp to 7% at first adjustment
Explanation
A 2/2/5 cap structure means: 2% max at first adjustment, 2% max per subsequent adjustment, and 5% max over the life of the loan. The first adjustment cannot exceed 2% above the initial rate.
Related Texas Finance Questions
- A 'balloon mortgage' in Texas requires the borrower to:
- A Texas homestead is protected from forced sale for all of the following EXCEPT:
- Under the Texas Constitution, a home equity loan or HELOC cannot be made to a homestead owner more than:
- Texas is a community property state. This means that property acquired during marriage:
- The Texas Veterans Land Board (VLB) provides home loan programs for qualifying Texas veterans. The VLB is unique in that it:
- A Texas construction loan is converted to a permanent mortgage upon completion of construction. This conversion is called:
- Under the Dodd-Frank Act, a Qualified Mortgage (QM) generally prohibits:
- A Texas borrower is considering a 15-year mortgage versus a 30-year mortgage at the same interest rate. Which statement is TRUE?
Practice More Texas Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Texas Quiz →