Finance
An adjustable-rate mortgage (ARM) in Utah has an interest rate that:
ARemains fixed for the entire loan term
BAdjusts periodically based on an index plus a margin✓ Correct
CIs set by the Utah Division of Real Estate
DDecreases by 0.5% each year automatically
Explanation
ARM interest rates adjust at specified intervals based on a financial index (such as SOFR) plus a lender's margin. This creates potential payment fluctuations for borrowers.
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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.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
Math Concepts
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