Mortgage Loan Originator (MLO) Licensing 2026 – 400 Free Practice Questions to Pass the Exam

The notation "5/6" in a 5/6 Adjustable Rate Mortgage (ARM) indicates that the mortgage has a fixed interest rate for a period of five years. After this five-year fixed-rate period, the interest rate adjusts based on a specified index, and it does so every six months thereafter. This structure allows borrowers to have a period of stability with fixed payments before experiencing potential fluctuations in their rates and payments.

Understanding this structure is crucial when navigating ARMs, as it provides insight into how long borrowers can expect their rate to remain unchanged, and when they should be prepared for adjustments. The "2/6 caps" information refers to the limits on how much the interest rate can increase during adjustment periods, but the "5/6" part specifically addresses the initial fixed-rate duration and the frequency of adjustments afterward.