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What is an Interest-Rate Cap for an adjustable rate mortgage?

April 26, 2017adjustable rate mortgage cap

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What is an Interest-Rate Cap for an adjustable rate mortgage?

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An interest-rate cap places a limit on the amount your interest rate can increase or decrease. There are two types of caps: 1. Periodic or adjustment caps, which limit the interest rate increase or decrease from one adjustment period to the next. 2. Overall or lifetime caps, which limit the interest rate increase over the life of the loan. As you can imagine, interest rate caps are very important since no one knows what can happen in the future. All of the Arms we offer have both adjustment and lifetime caps. Please see each product description for full details.