Finance
An adjustable-rate mortgage (ARM) is characterized by:
AA fixed interest rate for the entire loan term
BAn interest rate that changes periodically based on an index✓ Correct
CMonthly payments that decrease over time
DA balloon payment required within the first 5 years
Explanation
An ARM features an interest rate that adjusts periodically (monthly, annually, etc.) based on a specified index (such as SOFR or a Treasury rate) plus a margin. ARMs typically start with a lower initial rate than fixed-rate mortgages.
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