Finance
An adjustable-rate mortgage (ARM) in Utah has a 5/1 structure. This means:
AThe rate is fixed for 5 months then adjusts monthly
BThe rate is fixed for 5 years then adjusts annually✓ Correct
CThe loan term is 5 years with 1 rate adjustment
D5% initial rate with 1% annual cap
Explanation
A 5/1 ARM has a fixed interest rate for the first 5 years, then adjusts annually based on a market index plus a margin. The initial fixed period provides some payment stability before the rate becomes variable.
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