Finance
A Massachusetts adjustable-rate mortgage (ARM) with a 2/6 cap means:
AThe rate can adjust 2% per year with a lifetime cap of 6%
BThe initial rate adjusts a maximum of 2% at first adjustment and can increase no more than 6% over the loan's life✓ Correct
CThe loan has a 2-year fixed period followed by 6 annual adjustments
DThe payment can increase 2% per month up to 6% per year
Explanation
A 2/6 ARM cap means the interest rate can increase no more than 2% at the first adjustment period and no more than 6% total over the life of the loan from the initial rate. These caps protect borrowers from extreme rate increases.
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