Question

If one of the terms of an ARM read, interest is capped at 2%/5%, what would that mean?
(A) The borrower can choose the cap he wants by simply circling the appropriate choice
(B) The interest rate has a 2% annual cap rate and a 5% lifetime cap rate
(C) The interest rate has a 5% annual cap rate and a 2% lifetime cap rate
(D) The interest rate has a 2% annual cap rate and a 5% floor cap rate

Answer

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