Highest amount that the interest rate on an adjustable rate loan can go on the first adjustment date. This is included with the structure of the interest rate cap and it is helpful in giving borrowers some type of protection from their rate going too high at once. Conversely, this cap also limits the benefit that borrowers could get from large reductions in the interest rate.
Related information about initial interest rate cap:
- Initial Interest Rate Cap Definition | Investopedia
The maximum amount the interest rate on an adjustable-rate loan can adjust on its first scheduled adjustment date. This is part of the interest rate cap structure ...
- Interest Rate Cap Structure Definition | Investopedia
Test your trading skills! Related Definitions. Adjustable-Rate Mortgage - ARM. A type of ... Initial Interest Rate Cap. The maximum ... Payment Shock. The risk that ...
- Periodic Interest Rate Cap Definition | Investopedia
For example, an adjustable rate mortgage with a starting interest of 6%, an initial interest rate cap of 2% and a periodic interest rate cap of 2% could adjust ...
- Lifetime Cap Definition | Investopedia
Initial Interest Rate Cap. The maximum ... Interest Rate Cap Structure. Limits to the ... Articles Of Interest. ARMed And Dangerous. In a climate of rising interest ...
- What is initial interest rate cap? definition and meaning
Definition of initial interest rate cap: Highest amount that the interest rate on an adjustable rate loan can go on the first adjustment date. This is included with the ...
- Structured Adjustable-Rate Mortgage Loans - Fannie Mae
The term of the initial interest rate cap need not be equal to the term of the mortgage loan, but must be for at least 5 years. − If the mortgage loan term is longer ...
- DUS Discount Mortgage-Backed Securities - AmeriSphere
term of the initial interest rate cap, a cash reserve for the purchase of a subsequent interest rate cap is established and funded monthly by the borrower at 125% ...
- Sample Contracts - Mezzanine Loan Agreement - Merrill Lynch ...
Sep 2, 2004 ... "Initial Interest Rate Cap Agreement" means a confirmation (together with the definitions, ISDA master agreement and schedules relating ...