Definitions for **"PAYMENT CAP"**

A provision in some adjustable-rate mortgages (ARMs) which limits the amount by which the payment may increase, regardless of increases in the interest rate. Payment caps can lead to negative amortization.

A legal limit on the amount a monthly payment can increase on an variable rate loan.

A limitation on the amount a monthly payment may increase in an ARM.

A limit on how much an ARM's payment amount may increase, regardless of how much the interest rate increases.

With some adjustable-rate-mortgages, it's a provision limiting the amount by which a borrower's payments may increase regardless of any interest rate increase.

A limit on how much an adjustable rate mortgage (ARM) payment may increase during the life of the loan.

A maximum amount for a payment under an adjustable rate mortgage, regardless of the increase in the interest rate. If the payment is less than the interest rate alone, negative amortization is created.

A provision of some ARM's limiting how much a borrower's payments may increase regardless of how much the interest rate increases; be aware that on some ARM's this may lead to "negative amortization."

a limit placed on the changes (increase or decreases) on the payment amount

A limit on the amount that monthly payments on an adjustable rate mortgage may change.

The maximum that a payment will change from one payment to the next. This change is for both increases and decreases in payments.

Provision of some ARMs limiting the amount the interest rate can increase or decrease during any adjustment period, regardless of any index increase. Also known as a Cap.

the maximum amount the payment can adjust at any one time, as to avoid payment shock.

With regard to an adjustable rate mortgage, this limits the amount of increase in the borrower's monthly principal and interest at the payment adjustment date, if the principal and interest increase called for by the interest rate increase exceeds the payment cap percentage. This limitation is often at the borrower's option and may result in negative amortization.

Caps apply to adjustable rate mortgages (ARMs). To minimize the risk of extreme fluctuations in interest rates, caps are imposed on your rate. Caps protect you by limiting the percentage by which your rate can increase.

The maximum payment amount on an adjustable loan even if the interest rate increases.

A contractual limitation on the amount of the monthly payment of an adjustable-rate mortgage or other variable rate loan.

Protective device included on some adjustable rate mortgages that sets a maximum amount monthly payments may rise in any given year.

For an adjustable-rate mortgage (ARM) or other variable rate loan, a limit on the amount that payments can increase or decrease during any one adjustment period.

A limit on how much the payments on an adjustable rate mortgage (ARM) can go up or down.

The limitation on increases or decreases in the payment amount of an adjustable-rate mortgage.

A provision of an Adjustable Rate Mortgage that limits how much a borrower's payments can increase.

See: cap.

A limit on the amount that the monthly payments on an adjustable rate mortgage can increase or decrease at each adjustment period. For example, if your monthly payments start at $1,000 and the ARM has a payment cap of 7.5%, the next adjustment cannot exceed plus or minus $75 per month regardless of how much the loan's index changes. This can lead to negative amortization if the interest rate goes up and the monthly payment amount is too small to cover the increased interest charges.

A Payment Cap is a cap that is placed on the amount of a borrowerâ€™s payment. In other words a mortgage payment with a payment cap can only be so much each month.

A term of some variable or adjustable rate mortgages in which the level to which the monthly payment may rise is limited to a certain dollar figure.

The limit on the amount the monthly payment can be increased on an adjustable-rate mortgage when the interest rate is adjusted.

Used instead of a "rate" cap. Payment caps can prevent the monthly payment from rising out of control, however the interest rate is not limited. The difference if the rate exceeding what the payment cap limits, the result will incur negative amortization, which increases, rather than decreases, conventional amortization values.

A limit on the amount the monthly principal and interest payment can change during the term of an ARM - or from one adjustment period to the next.

A limit on the amount that the monthly payment can increase. A periodic cap limits the amount of the increase at each adjustment period. A lifetime cap limits the amount that the monthly payment can increase during the term of the loan. A potential peril of payment caps is negative amortization. In the case of an adjustable-rate mortgage with a payment cap, rising interest rates may casue the loan payment tobe insufficient to cover even the interest portion of the scheduled payment. In this case, the unpaid interest may be added to the mortgage loan principal, if the loan agreement permits.

A provision of some Arms limiting the amount by with which a borrower's payments may increase regardless of any interest rate increases; may result in negative amortization. See Adjustable-rate mortgage.

A provision of some ARM's limiting the amount by which a borrower's payments may increase regardless of any interest rate increase; may result in negative amortization.

Maximum monthly payment required on an ARM

A limit on how much the monthly payment for an Adjustable Rate Mortgage can increase. This doesnâ€(tm)t limit the amount of interest the lender is earning just the amount you pay so negative amortization may result.

The legal limit that a monthly payment may increase on an adjustable rate mortgage.

The limit that the monthly payment can change from one adjustment period to another.

For an adjustable-rate mortgage where the interest rate and the minimum payment amount fluctuate independently of one another, this is a limit on the amount that payments can increase or decrease during any one adjustment period.

A limit on the amount an ARM's payment can be increased, either during a given year, or over the entire life of the loan.

The maximum amount the payment can adjust in any given time frame.

A provision of some ARMs limiting how much a borrower's payments may increase regardless of how much the interest rate increases; may result in negative amortization.

A contractual limit on the percentage amount of adjustment allowed in the monthly payment for an adjustable rate mortgage at any one adjustment period. Generally it does not affect the interest rate charged. If the allowable payment does not cover interest due on the principal at the adjusted rate of interest, negative amortization will occur.

Consumer safeguards which limit the amount monthly payments on an adjustable-rate mortgage may change. Since they do not limit the amount of interest the lender is earning, they may cause negative amortization.

This limited amount by which the payment on a variable rate loan can increase or decrease at each payment adjustment interval (typically one year). A payment cap ensures that the payment changes occur at a gradual pace.

A legal limit on the amount a monthly payment can increase on an adjustable rate mortgage.

A limit on the amount or percentage that a payment can change at any one time of adjustment. Not all loans have a payment cap.

The limited amount by which the payment on an ARM can increase or decrease at each payment adjustment interval.

This cap places an annual limit on the amount that a monthly payment can increase. This feature is offered by some ARM lenders instead of an annual interest rate cap.

A contractual limit on the size of the monthly payment of an adjustable-rate mortgage or other variable rate loan.

the maximum amount a mortgage payment can be.

A legal limit on the amount a monthly payment can go up by on a variable rate loan / mortgage.

Payment caps limit the change in monthly payments based on a maximum percentage change in payment. Typically used in negative amortizing loans. (see negative amortization)

Limit on the amount by which a borrower's ARM payments may increase, regardless of rise in interest rates. May result in negative amortization.

A limit on the amount the payment can be changed at the end of each Payment Adjustment Period.

With regard to an adjustable rate mortgage; it is a limit on the increase in the borrower's monthly payment of principal and interest on the payment adjustment date.

A cap placed on the borrower's payment rather than his interest rate. The level to which the monthly payment may rise is limited to a certain dollar figure. A typical payment cap used today would be 7.5% of the payment (Roughly equivalent to one percent in interest). back

Payment Change Date