Finance
An 'adjustable-rate mortgage' (ARM) with a 2/2/6 cap means:
AA. The rate is fixed for 2 years, then can adjust by 2% per year with a 6% lifetime cap
BB. The initial adjustment is capped at 2%, subsequent adjustments at 2%, and total lifetime adjustment at 6%✓ Correct
CC. The loan has a 2-year term with 2% down and 6% interest
DD. The rate can adjust every 2 months with a 6% increase limit
Explanation
ARM caps are expressed as initial/periodic/lifetime. A 2/2/6 cap means: (1) the first adjustment after the initial fixed period can be no more than 2%; (2) each subsequent adjustment can be no more than 2%; and (3) the total rate increase over the life of the loan can be no more than 6%.
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