Finance
In West Virginia, an adjustable rate mortgage (ARM) with a 2/2/6 cap structure means:
AThe initial rate can increase 2% at first adjustment, 2% at each subsequent adjustment, and 6% lifetime✓ Correct
BThe rate adjusts every 2 years with a 2% lifetime cap
CThe rate decreases 6% if the index drops by 2%
D2% down, 2 years fixed, 6% maximum rate
Explanation
ARM caps protect borrowers from unlimited rate increases. A 2/2/6 cap means: the rate can increase up to 2% at the first adjustment, up to 2% at each subsequent adjustment, and up to 6% over the life of the loan from the initial rate.
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