A 5/1 ARM loan means:
Correct Answer
B) The interest rate is fixed for the first 5 years, then adjusts annually thereafter
A 5/1 ARM (Adjustable-Rate Mortgage) has an interest rate that remains fixed for the first 5 years of the loan, then adjusts once per year (annually) for the remainder of the loan term based on a specified index plus a margin. The '5' refers to the initial fixed-rate period and the '1' refers to how frequently the rate adjusts afterward.
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