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