What is an ARM that has a monthly payment sufficient to amortize the remaining balance over the amortization term called?

What is an ARM that has a monthly payment sufficient to amortize the remaining balance over the amortization term called?

• A. Fully Amortized ARM
• B. Funding
• C. Foreclosure
• D. Fraud

Answer: (A)

A mortgage loan known as a Fully Amortized ARM, or Adjustable Rate Mortgage, is characterized by its monthly payments that are calculated to ensure that the remaining balance is completely paid off by the end of the amortization term. This means that the borrower pays both principal and interest over the course of the loan, with the aim of reducing the principal balance to zero by the maturity date. In a Fully Amortized ARM, the interest rate is variable and can change at specified intervals, but the monthly payment is structured to amortize the loan based on the remaining balance at those intervals. As the interest rates adjust, the monthly payment might change accordingly, but the re-calculated payment will still focus on fully amortizing the loan over the set term. This ensures that the borrower is not only paying interest over the life of the loan but also reducing their principal. Other terms listed, such as Funding, Foreclosure, and Fraud, do not relate to the structure of loan payments or amortization schedules, making them unsuitable choices in this context. Funding generally refers to the provision of funds for various financial purposes, whereas foreclosure pertains to the legal process by which a lender claims ownership of a property from a borrower who has defaulted. Fraud refers to wrongful or

A mortgage loan known as a Fully Amortized ARM, or Adjustable Rate Mortgage, is characterized by its monthly payments that are calculated to ensure that the remaining balance is completely paid off by the end of the amortization term. This means that the borrower pays both principal and interest over the course of the loan, with the aim of reducing the principal balance to zero by the maturity date.

In a Fully Amortized ARM, the interest rate is variable and can change at specified intervals, but the monthly payment is structured to amortize the loan based on the remaining balance at those intervals. As the interest rates adjust, the monthly payment might change accordingly, but the re-calculated payment will still focus on fully amortizing the loan over the set term. This ensures that the borrower is not only paying interest over the life of the loan but also reducing their principal.

Other terms listed, such as Funding, Foreclosure, and Fraud, do not relate to the structure of loan payments or amortization schedules, making them unsuitable choices in this context. Funding generally refers to the provision of funds for various financial purposes, whereas foreclosure pertains to the legal process by which a lender claims ownership of a property from a borrower who has defaulted. Fraud refers to wrongful or