CAP

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January 1, 1 6 min read Definitions

CAP Adjustable Rate Mortgages Interest Rate Adjustments Mortgage Protection Annual Cap Life of Loan Cap Payment Cap Real Estate Finance

CAP in adjustable rate mortgages (ARMs) refers to a limit placed on adjustments to protect the borrower from large increases in the interest rate or the payment level. There are different types of caps, including annual caps, lifetime caps (life-of-loan caps), and payment caps. This measure helps borrowers by providing predictability and stability in their mortgage payments.