What is a key element that must be included in an ARM disclosure?

In an Adjustable Rate Mortgage (ARM) disclosure, a key element that must be included is the maximum possible interest rate. This is crucial because it informs potential borrowers about the risk associated with an ARM; the interest rate can fluctuate over time based on market conditions, and knowing the maximum rate helps borrowers prepare for potential increases in their monthly payments. Understanding this maximum allows consumers to make informed decisions about their ability to handle future payment changes and the overall affordability of the mortgage.

The other options, while related to the mortgage process and borrower considerations, do not address the essential disclosure requirements mandated for ARMs. For example, the precise amount of the loan is important but more about the specific terms of the mortgage rather than disclosure requirements. The history of the lender's performance provides context but is not a required element of ARM disclosures. Lastly, the total cost of insurance is relevant to overall mortgage costs but is not specific to the ARM’s structure or its rate adjustments. Therefore, focusing on the maximum possible interest rate is critical for borrower transparency and informed decision-making in adjustable-rate scenarios.