31 May 2007 06:55 am
Here’s Help for You, Understand the 10 must-know ARM terms
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| Adjustable rate mortgages (ARMs) can be difficult to understand with a language of their own. So learn your cap, index and reset terms. Here are 10 of the most important terms. The first is “Cap” which is the top limit on the amount the interest rate can increase during a certain period of an [tag]adjustable-rate mortgage[/tag], or ARM. Every ARM has two caps: a periodic cap, which limits the periodic changes to the interest allowed in the loan agreement, and a lifetime cap, which governs the total increase that can be imposed during the life of the loan. | 
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