Question

Unlike a traditional mortgage, an ARM _____.

Select the best answer from the choices provided.
requires no down payment
has an interest rate that can change every year
cannot be foreclosed on by a bank
typically has a term of 30 years

Answer 1

has an interest rate that can change every year.

Step-by-step explanation:

An adjustable-rate mortgage (ARM) usually starts with a lower interest rate than a regular mortgage, but that low interest rate can last for month, maybe a year or even a few years, but later it tends to fluctuate as the market interest rates change. Remember 2007, when the monthly payments of ARMs skyrocketed and foreclosures multiplied around the country?

The main advantage of fixed-rate mortgages (traditional mortgages) is that the interest rate is fixed and that helps families to plan their finances over the long run. You must remember that a mortgage loan takes a lot of years to be paid (between 20-30 years), and a lot of things happen during those years.

Answer 2

Unlike a traditional mortgage, an ARM has an interest rate that can change every year. The correct option among all the options that are given in the question is the second option. The other options in the question can be negated. I hope that the answer has actually come to your help.