Many people have jumped on adjustable rate mortgages to take advantage of the historically low interest rates we have seen over the last few years. Rates are now rising, which means you need to understand caps.
Adjustable Rate Mortgages Talking About Interest Rate Caps
An adjustable rate mortgage is just what it sounds like. The interest rate can be adjusted to match certain interest rate standards. The advantage of such a loan is it can seriously lower monthly mortgage payments if interest rates are low. Over the last few years, of course, rates have been incredibly low. Rates are now rising and you need to understand what that means for your adjustable rate mortgage.
Since the interest rate on your loan is adjustable, you should be getting a little nervous about rising interest rates. That being said, most loans have graduated step increases and caps that keep things from getting nightmarish too quickly. Here is a closer look.
A good adjustable rate mortgage protects you from massive rate increases through something known as rate caps. There are two types of rate caps. Each has benefits and negatives.
A lifetime rate cap is just what it...
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