Posted on: 27th Sep, 2006 07:22 am
what is the difference between the payment cap and the FIR? Can they be different?
Hi Pabouk,
In an ARM loan, the fully indexed rate is the maximum interest rate can go up to at the first adjustment. Whereas a payment cap is the amount of payment that can get adjusted at any one time.
For an ARM the initial interest rate holds for a specific period of time. The FIR indicates what the rate will be after the initial rate period ends.
Thanks
James
In an ARM loan, the fully indexed rate is the maximum interest rate can go up to at the first adjustment. Whereas a payment cap is the amount of payment that can get adjusted at any one time.
For an ARM the initial interest rate holds for a specific period of time. The FIR indicates what the rate will be after the initial rate period ends.
Thanks
James
Hi Pabouk,
The Fully indexed rate is the sum of the ARM index and the margin. The lender decides upon the margin which remains fixed for the entire loan term.
The payment cap is the limit on the amount up to which the monthly payments may increase or decrease during an adjustment period or for the entire loan period. The payment cap for the adjustment period is the periodic payment cap and that for the entire loan period is the lifetime payment cap.
Know more on Fully Indexed Rate for a clear idea on this topic.
God bless you
Samantha
The Fully indexed rate is the sum of the ARM index and the margin. The lender decides upon the margin which remains fixed for the entire loan term.
The payment cap is the limit on the amount up to which the monthly payments may increase or decrease during an adjustment period or for the entire loan period. The payment cap for the adjustment period is the periodic payment cap and that for the entire loan period is the lifetime payment cap.
Know more on Fully Indexed Rate for a clear idea on this topic.
God bless you
Samantha
