Finance
A Florida adjustable-rate mortgage (ARM) with a '2/6 cap structure' means:
AThe rate can adjust up 2% annually and 6% over the life of the loan✓ Correct
BThe initial rate is fixed for 2 years before adjusting every 6 months
CThe down payment is 2% with a 6% origination fee
DThe loan term is 2 years with a 6% balloon payment
Explanation
ARM caps limit rate changes. A 2/6 cap means: the rate can increase no more than 2% at any single adjustment period (periodic cap), and no more than 6% over the entire life of the loan (lifetime cap) above the initial rate.
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