Mortgage Glossary
Lifetime Cap
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
A lifetime cap is the maximum amount an adjustable-rate mortgage's interest rate can rise over the entire life of the loan.
What Lifetime Cap means
It sets a ceiling so the rate cannot climb indefinitely. ARMs have periodic caps limiting each adjustment and a lifetime cap limiting the total. Knowing the cap shows the worst-case payment.
Florida example
A 5/1 ARM starting at 5.5% with a 5% lifetime cap could never exceed 10.5%, letting the borrower plan for the highest possible payment.
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