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- A publicly published financial index such as LIBOR (usually 1 month, 6 month or 12 month), 11th District Cost of Funds Index, MTA, etc. Start Rate - The introductory rate provided to purchasers of ARM loans exclusive mortgage broker lead the initial fixed interest period. The difference between the "Start Rate" of an ARM and the rate of a fixed terms loan is that the "Start Rate". Period - This is the frequency of adjustments, the longer the rate remains fixed, the better the loan exclusive mortgage broker lead for the borrower. Typically, the shorter this is the lower the rate, exclusive mortgage broker lead there are more opportunities to adjust upwards. Floor - A clause that sets the minimum rate for the interest rate of an ARM loan. Most loans come with a Start Rate = Floor feature, but this is primarily for Non-Conforming (aka Sub-Prime or Program Lending) loan products. This prevents an ARM loan from ever adjusting lower. An "A Paper" loan typically has either no Floor or 2% below start. Initial Change Cap - ARM loans have a specified maximum first adjustment that is typically exclusive mortgage broker lead than allowed on subsequent changes. Periodic Change Cap - The maximum interest rate adjustment exclusive mortgage broker lead every subsequent periodic adjustment. Life Cap (Ceiling) - The maximum upwards adjustment of an ARM loan. Typically on first mortgages no more than 6% Crucial Information About Caps Loan caps provide payment protection against payment shock. Most First Mortgage loans have a 5% or 6% Life Cap. Higher risk products, such as Monthly Adjustable loans with Negative amortization and Home Equity Lines of Credit aka HELOC have different ways of structuring the Cap than a typical First exclusive mortgage broker lead Mortgage. First Lien Caps with no Negative amortization Most First Mortgage loans have a 5% or 6% Life Cap. If the adjustment period is 6 months or 1 year ( the two most common periods on the market), then it takes anywhere from 2-4 maxiumum upward adjustments to reach this cap exclusive mortgage broker lead amortization ARM caps See the
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