The advantages of a fixed-rate mortgage over an ARM include
A)no private mortgage insurance required.
B)fixed payments that are easier to budget for.
C)less worry about the loan reaching the rate and payment caps.
D)none of the above.
E)both B and C.

Question

Quizplus · Accepted Answer

Option B is correct because with a fixed-rate mortgage, the borrower has a consistent monthly mortgage payment, and it's easier for them to budget for. Option C is also correct because ARM loans have rate and payment caps, meaning there is a limit to how much the rates can adjust during the life of the loan, and if interest rates go up, it could mean higher payments for the borrower. With a fixed-rate mortgage, the borrower does not need to worry about sudden increases in their monthly payments. Option A is incorrect because private mortgage insurance is not dependent on the type of loan (fixed-rate or ARM), but rather on the down payment and loan-to-value ratio.

The Advantages of a Fixed-Rate Mortgage Over an ARM Include