Annual cap is a limitation on the amount by which the interest rate on an adjustable-rate mortgage (ARM) can increase or decrease over a one-year period, protecting borrowers from significant fluctuations in their monthly mortgage payments.
The Initial Rate Period is the timeframe in an Adjustable-Rate Mortgage (ARM) during which the initial interest rate is fixed. This period lasts until the first scheduled adjustment, after which the interest rate is recalibrated according to the underlying index.
Recasting is the process of adjusting a loan arrangement, often to prevent default, by extending maturity or changing the interest rate.
A Renegotiated Rate Mortgage (RRM) allows borrowers to renegotiate the interest rate of their existing mortgage, often providing an opportunity to lower monthly payments and overall interest costs.
A step loan is a type of adjustable-rate mortgage where the interest rate is adjusted only once during the life of the loan, blending characteristics of both fixed-rate and adjustable-rate loans.
A Variable-Maturity Mortgage (VMM) is a long-term mortgage loan where the interest rate may be adjusted periodically, impacting the loan term while keeping the payment levels constant.
