Real Estate Glossary | What is Interest Rate Caps??

Q: What is Interest Rate Caps?

A limit on how high an adjustable-rate mortgage's interest rate can rise. Interest rate caps are often used to mitigate the risk associated with adjustable-rate mortgages, which have interest rates that can fluctuate based on market conditions. They ensure that the interest rate on the loan does not rise above a certain level, regardless of changes in the market.

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