This option prevents dramatic jumps in the interest rate on the ARM. (mortgagecalculator.biz)
It is important to be aware that a big jump in interest rates could be quite painful for bond investors due to a combination of falling bond prices, inflation, and taxes. (moneysense.ca)
Annual caps protect you from extreme jumps in the interest rate in any given year and are usually in the one to two percent range. (myhomesdb.com)