A community for students.
Here's the question you clicked on:
 0 viewing
Jovanmommy_13
 3 years ago
You are considering a 5/1 ARM. What does the 5 represent?
A.The number of years between adjustments in the interest rate
B.The number of years that a fixed interest rate will be applied to the loan
C.The total number of years in the loan
D.The interest rate of the initial fixedrate loan period
Jovanmommy_13
 3 years ago
You are considering a 5/1 ARM. What does the 5 represent? A.The number of years between adjustments in the interest rate B.The number of years that a fixed interest rate will be applied to the loan C.The total number of years in the loan D.The interest rate of the initial fixedrate loan period

This Question is Closed

jim_thompson5910
 3 years ago
Best ResponseYou've already chosen the best response.0the 5 in 5/1 means that you apply a certain interest rate for the first five years...this interest rate will NOT change during the first five years. the 1 in 5/1 means you increment that interest rate (a specific/fixed amount) each year until you reach the cap

jim_thompson5910
 3 years ago
Best ResponseYou've already chosen the best response.0example: say you have a 5/1 ARM at 5.25% annual interest rate and you have a 1/12 cap structure this would mean that during the first five years the interest rate is locked in at 5.25% after the 5 years, the interest rate will go up one percentage point (6.25% on year 6, 7.25% on year 7, etc) until you reach the cap of 12%
Ask your own question
Sign UpFind more explanations on OpenStudy
Your question is ready. Sign up for free to start getting answers.
spraguer
(Moderator)
5
→ View Detailed Profile
is replying to Can someone tell me what button the professor is hitting...
23
 Teamwork 19 Teammate
 Problem Solving 19 Hero
 Engagement 19 Mad Hatter
 You have blocked this person.
 ✔ You're a fan Checking fan status...
Thanks for being so helpful in mathematics. If you are getting quality help, make sure you spread the word about OpenStudy.