Life Cap

Limits the amount that a loan rate can change during the mortgage term. For example, if the rate on an adjustable-rate mortgage begins at 5 percent and has a life cap of 6 percentage points, it can’t go over 11 percent.

Related Terms:

  1. Adjustable Rate Mortgage (ARM)
  2. Basis Point
  3. Annual Percentage Rate (APR)
  4. Interest Rate
  5. Lifetime Rate Cap

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