| of funds as measured by inflation. Index - 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 abn amro mortgage group for 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 abn amro mortgage group the loan is for the borrower. Typically, the shorter this is the lower the rate, since there are more abn amro mortgage group 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 abn amro mortgage group loan typically has either no Floor or 2% below start. Initial Change Cap - ARM loans have a specified maximum first adjustment that is typically higher than allowed on subsequent changes. Periodic Change Cap - The maximum interest rate adjustment for every subsequent periodic adjustment. Life Cap (Ceiling) - The maximum upwards adjustment abn amro mortgage group 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 abn amro mortgage group and Home Equity Lines of Credit aka HELOC have different ways of structuring the Cap than a typical First Lien Mortgage. First Lien Caps with no Negative amortization Most First Mortgage loans have a 5% or 6% Life Cap. If the adjustment period abn amro mortgage group 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 Negative amortization |  |
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