Business and Personal Finance Dictionary
# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
- RATE CAP INSURANCE
Rate cap insurance limits how much the interest rate can increase during the float period (usually no more than .5%). For example, if you get the insurance when the rate is 7.5%, you will be guaranteed that the rate will not go above 8%. This protects you from uncertainty in the market and rising rates. With the insurance you will be told that you can lock-in a rate, usually within 60 days of closing. You can also lock if the rate goes lower.Back