interest rate caps
Loan cost limits
Interest rate caps are contractual limits on how high an interest rate can rise, most common in adjustable-rate mortgages and variable-rate loans.
They protect borrowers from dramatic payment increases when rates climb.
Caps may limit each adjustment period, the total increase over the loan's life, or both: The ARM has a 2% annual cap and a 6% lifetime cap.
- ceilingRoom's upper surface
- mortgageSecured home loan
- lendingTemporary provision of resources
- subprime lendingLoans to high-risk borrowers
- floatingStaying atop liquid
variable · fixed · adjustable · borrowing · hedge · protection · premium · collar · floor · derivative · swap · LIBOR · threshold · reset · ARM · refinance · balloon · banking
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