(Also called "Interest Rate Caps"). A limit on the amount of which the interest rate charged to the borrower can be changed.

For an adjustable rate mortgage loan, the maximum interest rate that may be charged, either at the time of each adjustment date or over the life of the loan.

Lenders offer caps with their adjustable rate mortgages (ARMs) so you can have more control over your monthly mortgage payment. Usually, there are two types of rate caps: A per-adjustment cap, which specifies the most your interest rate can rise from one adjustment period to the next, and a lifetime adjustment cap, which specifies how much your interest rate can rise over the life of your loan. Ask your lender about both caps when evaluating any ARM product.