With a fixed-rate mortgage,the ________ bears the interest rate risk and with an ARM the ________ bears the interest rate risk.

Question

Quizplus · Accepted Answer

In a fixed-rate mortgage, the lender bears the interest rate risk because the interest rate remains constant even if market rates increase. With an Adjustable Rate Mortgage (ARM), the borrower bears the interest rate risk because the interest rate can change, potentially increasing the borrower's payments.

With a Fixed-Rate Mortgage,the ________ Bears the Interest Rate Risk