 Samantha
Community Mentor
Joined: 16 Sep 2005
Posts: 1606
Location: MASSACHUSETTS
150.38 Dollars($)
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 Posted: Mon Jan 23, 2006 3:59 pm Post subject: |
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Hi Amanda,
Lifetime cap is available with almost all ARMs. You are financially protected with it as it limits the interest arte increase over the span of the loan.
A lifetime cap may vary from 9% to 19%. The cap varies from company to company and between loan types.
Usually loans which carry low margins have higher lifetime caps and vice versa.
There is two types of rate caps with most ARMs, adjustment caps and lifetime caps. With the adjustment cap the size of the change in rate is limited and the maximum rate over the life span of the loan is set with lifetime caps.
A 2/2/5 cap means that the initial adjustment cap is 2%, the subsequent adjustment cap is also 2% and the lifetime cap is 5% over the initial rate.
Hope this information will help you.
God bless you.
For MortgageFit,
Samantha
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