Finance
What is an 'interest rate cap' in a Kansas adjustable-rate mortgage (ARM)?
AThe maximum credit score needed for the loan
BA limit on how much the interest rate can increase, either per adjustment period or over the life of the loan✓ Correct
CThe maximum loan amount allowed
DThe ceiling on property taxes for the borrower
Explanation
ARMs include rate caps that limit how much the interest rate can change at each adjustment period and/or over the life of the loan (periodic cap and lifetime cap), protecting borrowers from extreme rate increases.
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