Finance
A Vermont adjustable-rate mortgage (ARM) with a '2/6 cap' means:
AThe initial rate can increase 2% per year with a 6% lifetime cap
BThe rate can increase 2% at each adjustment, with a maximum lifetime increase of 6% over the initial rate✓ Correct
CThe loan term is 2 years with a 6-month rate review
DThe initial fixed period is 2 years and adjustments occur every 6 months thereafter
Explanation
ARM cap structures limit rate increases. A 2/6 cap means the rate can increase no more than 2% at any single adjustment period and no more than 6% total over the life of the loan from the initial rate.
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