The adjustment interval refers to the frequency at which the interest rate of an adjustable-rate mortgage (ARM) is recalculated. It plays a crucial role in determining how often a borrower's mortgage payments may change.
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.
An Indexed Loan is a long-term loan where the term, payment, interest rate, or principal amount may be adjusted periodically in accordance with a specific index.
