A bank advertises an adjustable rate mortgage with the following terms:

15 year 6/1 ARM at 5% with a 2/6 cap structure.

What are the maximum interest rates for the 7th year and for the life of the mortgage?

a. 7th year: 6%; lifetime: 6%
b. 7th year: 6%; lifetime: 11%
c. 7th year: 7%; lifetime: 11%
d. 7th year: 7%; lifetime: 6%

Question

A bank advertises an adjustable rate mortgage with the following terms:

15 year 6/1 ARM at 5% with a 2/6 cap structure.

What are the maximum interest rates for the 7th year and for the life of the mortgage?

a. 7th year: 6%; lifetime: 6%     
b. 7th year: 6%; lifetime: 11%
c. 7th year: 7%; lifetime: 11%
d. 7th year: 7%; lifetime: 6%

anonymous · Answer

@collegekids

anonymous · Answer

Not sure with the mortgage ones

anonymous · Answer

awe dang it okay, thank you for helping though.

anonymous · Answer

I can solve the math its just that I can't understand what cap structure means

anonymous · Answer

oh ok, ugm. I don't either haha ill find someone to solve this one. Can you still help me though with the others if its not about cap structure?