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How Adjustable-Rate Mortgages Work
Adjustable-rate mortgages, or "ARMs", are more complicated than fixed-rate mortgages. The initial interest rate on an ARM is set below the market rate on a comparable fixed-rate mortgage. This rate remains constant for a fixed period, but later adjusts from time to time to reflect the current interest rate. Which statement is false?
ARMs initially have lower payments, so they make it possible for people with limited resources to buy more expensive homes.
An ARM may make sense if you plan to sell your home in a few years.
ARMs are structured so you're always able to pay what you owe.
"C" is false. Before locking into an ARM, make sure you'll be able to afford your monthly mortgage payment even if the interest rate goes up.