Final answer:
The statement that is not true concerning adjustable-rate mortgages is that there is usually no limit on how much a rate may increase per year. ARMs typically have caps that limit the increase per year and over the life of the loan. Option b
Step-by-step explanation:
The question pertains to the characteristics of an adjustable-rate mortgage (ARM). When evaluating the statements provided, it is important to consider the common features of ARMs. Typically, adjustable-rate mortgages indeed have both periodic adjustment caps and lifetime caps. These caps are actually in place to limit how much the interest rate can increase both per year and over the life of the loan.
Therefore, the statement that is not true concerning adjustable-rate mortgages is B) There is usually no limit on how much a rate may increase per year. This statement is incorrect because ARMs generally have a limit on both the amount the interest rate can increase each year and over the entire term of the mortgage.
Although the exact amount of the cap can vary, statement D) The maximum increase over the life of the loan is usually 5% is also not universally true, as the cap can be higher or lower depending on the specific terms of the loan. Option b