Question

You are considering a 5/1 ARM. What does the 1 represent?

O
A. The interest rate of the initial fixed-rate loan period
O
B. The number of years between adjustments in the interest rate
O
C. The total number of years in the loan
D. The number of years that a fixed interest rate will be applied to the
loan
O

Answer 1

Answer: The number of years between adjustments in the interest rate

Explanation:

APEX

Answer 2

B. The number of years between adjustments in the interest rate

Explanation:

The "5" in "5/1" means there will not be any adjustment in interest rate for the first 5 years.

The "1" in "5/1" means interest rates may be adjusted at 1-year intervals after the initial 5-year period.