A creditor offers the following loans to a qualified borrower: 30-year fixed at 6.5% with $2,500 points, 30-year fixed at 7.0% with $500 points, and 5/1 ARM at 6.0% with $1,000 points. If the borrower wants to avoid adjustable rate features, which loan should be presented as the lowest rate without risky features?
Correct Answer
B) 30-year fixed at 6.5% with $2,500 points
Among loans without risky features (excluding the ARM), the 30-year fixed at 6.5% has the lowest interest rate. While adjustable rates are not specifically defined as risky features under the regulation, if we're looking for loans without variable rate features, the 6.5% fixed rate loan is the lowest rate option.
Why This Is the Correct Answer
Among loans without risky features (excluding the ARM), the 30-year fixed at 6.5% has the lowest interest rate. While adjustable rates are not specifically defined as risky features under the regulation, if we're looking for loans without variable rate features, the 6.5% fixed rate loan is the lowest rate option.
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