The Initial Rate on an ARM Will Typically Be

question 46

Multiple Choice

The initial rate on an ARM will typically be

• A)relatively low to benefit the homeowner.
• B)relatively high to allow the bank to recoup costs.
• C)about the same as a fixed rate loan on the same maturity.
• D)set by state law.

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Definitions:

Earned-Income Tax Credit

A refundable tax credit for low- to moderate-income working individuals and families, particularly those with children.

Tax Liability

The total amount of tax that an individual or organization owes to the government.

Social Security

A government program that provides financial assistance to people with an inadequate or no income, especially the elderly and disabled.

Payroll Taxes

Levies placed on either employers or employees, typically based on a proportion of the wages that staff receive from their employers.