An adjustable-rate mortgage (ARM) has:
Correct Answer
B) An interest rate that changes based on an index
An ARM has an interest rate that adjusts periodically based on a market index plus a margin. ARMs often start with lower rates than fixed-rate mortgages but carry the risk of rate increases.
Why This Is the Correct Answer
Related Concepts
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
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