Question

You are considering a 3/5 ARM. What does the 5 represent?

OA. The total number of years in the loan
OB. The number of years between adjustments in the interest rate
OC. The number of years that a fixed interest rate will be applied to the
loan
OD. The interest rate of the initial fixed-rate loan period

Answer 1

The 5 in a 3/5 ARM represents the number of years between adjustments in the interest rate.

Step-by-step explanation:

In a 3/5 ARM, the 5 represents the number of years between adjustments in the interest rate. An adjustable-rate mortgage (ARM) has a fixed interest rate for a certain period of time, and then the rate adjusts according to market conditions. In this case, the rate remains fixed for 3 years, and then adjusts every 5 years thereafter. This allows the borrower to take advantage of potential changes in interest rates over time.