In the year six the rate could increase by 1% to its maximum rate.
In the year 1- 3 the rate could be the start rate, in year 4 the rate could increase by 2%, in year 5 the rate could increase by 2% and maximum in 6 year .
The cap on ARMs is to protect the borrowers but it can affect the financial institutions or lenders because at times when the risk is too high they cannot charge the borrower the right interest that compensates for that because of cap.
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