1. Index rate
The rate to which the interest rate on an adjustable rate loan is tied.
One of the more popular indexes used is the 1-year U.S. Treasury bill.
The amount added to the index rate that represents the lender’s cost of
3. Interest Rate Cap Per Adjustment
The maximum amount a borrower's interest rate may increase or
decrease at time of adjustment.
4. Life Cap
This is the ceiling that the note rate cannot exceed over the life of
A period of time in which gradual repayment of debt occurs by means of
systematic payments of principle and/or interest. At the end of the time
period the balance is zero.
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