This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. This episode covers content for the National Real Estate Exam.

In this episode you will learn:

• The total interest rate for an ARM is calculated by adding the variable market index to the fixed lender margin.

• In a 5/1 ARM structure, the interest rate is fixed for the first five years and then adjusts every year thereafter.

• Interest rate caps like initial, periodic, and lifetime caps protect borrowers from excessive payment increases and payment shock.

• Negative amortization is a specific risk where the loan balance increases because monthly payments do not cover the full interest due.

• Federal law requires lenders to provide the Consumer Handbook on Adjustable Rate Mortgages (CHARM booklet) to educate applicants.

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