what is an advantage of an adjustable - rate mortgage?\na borrower always knows how much to pay the bank…

what is an advantage of an adjustable - rate mortgage?\na borrower always knows how much to pay the bank each month.\na borrower can purchase a home with little financial risk.\na drop in interest rates may result in lower monthly payments.\na rise in interest rates may result in lower monthly payments.

what is an advantage of an adjustable - rate mortgage?\na borrower always knows how much to pay the bank each month.\na borrower can purchase a home with little financial risk.\na drop in interest rates may result in lower monthly payments.\na rise in interest rates may result in lower monthly payments.

Answer

Brief Explanations:

An adjustable - rate mortgage (ARM) has an interest rate that can change over time. When interest rates drop, the monthly payment amount, which is based in part on the interest rate, may decrease. In an ARM, the payment amount is not fixed like in a fixed - rate mortgage, so the borrower doesn't always know the exact payment. Also, ARMs can have significant financial risk as rates can rise. And a rise in interest rates would lead to higher, not lower, monthly payments.

Answer:

A drop in interest rates may result in lower monthly payments.