What is one characteristic of adjustable-rate mortgages?

Adjustable-rate mortgages (ARMs) typically include terms that affect the borrower's ability to pay off the loan early, which may involve pre-payment penalties. However, whether or not an ARM has a pre-payment penalty can vary significantly based on the lender, the specific loan terms, and the borrower's negotiation. Because of this variability, it is accurate to say that ARMs may or may not have a pre-payment penalty, depending on these factors.

In contrast, the other choices are more definitive in nature. For example, saying that they always have a pre-payment penalty is not accurate since many ARMs do not impose such penalties. Similarly, stating that they are fixed for the life of the loan is incorrect since ARMs inherently involve fluctuations in interest rates over time, unlike fixed-rate mortgages that maintain the same rate throughout their term. While it is true that many ARMs have lower initial interest rates compared to fixed-rate mortgages, this is not a defining feature and does not apply universally, as various loans may offer different initial rates based on market conditions.