Finance
A Vermont adjustable-rate mortgage (ARM) includes a '2/6 cap.' This means:
AThe rate can increase by 2% annually and 6% over the life of the loan✓ Correct
BThe rate adjusts every 2 years with a 6% lifetime cap
CThe initial rate is locked for 2 years then adjusts every 6 months
DThe loan has a 2% origination fee and 6% maximum APR
Explanation
A 2/6 cap on an ARM means the interest rate can increase no more than 2% per adjustment period and no more than 6% over the life of the loan relative to the initial rate. Caps protect borrowers from unlimited rate increases.
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