The Purpose of a Rate Cap with a Variable Rate

question 98

Multiple Choice

The purpose of a rate cap with a variable rate mortgage is to

• A)minimize interest costs.
• B)prevent changes in the amount of the monthly payment.
• C)increase negative amortization.
• D)restrict the amount by which the interest rate can increase.
• E)lower the escrow account.

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Definitions:

Low-Income Consumers

Individuals or households with earnings that fall below a certain threshold, often qualifying them for specific benefits or considerations.

Domestic Farm Subsidies

Financial supports provided by a government to domestic farmers to supplement their income, manage the supply of agricultural commodities, and influence the cost and supply of such commodities.

World Trade

The exchange of goods, services, and capital among various countries and regions, without much hindrance or restriction.

International Allocation

The process of distributing resources or assets among different countries or international players based on specific criteria or needs.