A limit on the amount that your monthly mortgage payment on a loan may change, usually a percentage of the loan. The limit can be applied each time the payment changes or during the life of the mortgage. Payment caps may lead to negative amortization because they do not limit the amount of interest the lender is earning.
Same as "cap." See also "cap."
A limit on how much an ARM's payment may increase, regardless of how much the interest rate increases.
For an adjustable-rate mortgage (ARM) or other variable rate loan, a limit on the amount that payments can increase or decrease during any one adjustment period.
- Browse Related Terms: Adjustable-Rate Mortgage (ARM), annual cap, ARM, CAP, interest cap, Life Cap, life-of-loan cap, Lifetime Cap, Payment Cap, Rate Cap
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