A: Yes, most ARMs come with limits or caps on how much the interest rate can adjust, both upward and downward, during each adjustment period and over the life of the loan. These limits are designed to protect borrowers from excessive interest rate fluctuations.
Q: What happens if interest rates rise significantly?
A: If interest rates rise, your monthly mortgage payment will increase accordingly, up to the maximum adjustment limit specified in your loan agreement. However, it’s important to note that ARMs typically have gradual adjustment periods, so your payments will not increase drastically overnight.
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