Capped Rate
A capped rate is well, just like it sounds...a rate that is capped. In home financing terms, it is an interest rate that has been capped at a certain percent and cannot ever go above that set mark.
Let's say you're buying your dream house for a cool $900,000 bucks. You're discussing the details of your forever loan with your mortgage guy and he's droning on with the boring details of origination fees, PMI, closing costs, and attorney's fees, but you're only thinking about the stupidly, ridiculous amount of time that you'll be paying on the loan and about how much it's really going to cost you in the long run.
He's getting to the part about a capped rate and never having to pay more than x%...which suddenly peaks your interest (sounds like you might be saving a little dough on this baby). He explains that the current variable rate on your mortgage is 3.5% but because it's variable, this can fluctuate with the market. However, the interest is capped at 6% which means your rate will never go above that. Sounds like a deal! Until he says that you were actually only approved for a $90,000 loan. Humph.
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Finance: What is a 12b1 fee?91 Views
Finance a la shmoop.. what is a 12b1 fee what a clever name like why don't they give
normal names to these things like fund admin expense fee or just name it Bob [Document with Bob written at the top]
but they don't so you just have to memorize what they mean anyway
mutual funds had to bear enormous communications related expenses in the
pre computer-internet everyone has an email address era delivering gobs of [Mail man arrives at house]
paperwork snail mail to its customers it was enough expense to them that well
they frankly just hated doing it and did more or less anything they could to [Man licking envelopes]
avoid having to deliver you know dead trees so along came the investment
advisors act of 1940 which basically recognized that mutual funds did in fact
have expenses that were more than bonuses to the senior partners the 12b1
fee system allowed a fairly set and standard amount of fees to be charged to
customers so that a given mutual fund could recoup the money it had to spend [Fund statement document appears]
mailing annual reports and performance data and tax information and all kinds
of other things to its customers the 12b1 system was basically a
pass through set of charges such that the customer paid for her own paperwork
incentivizing mutual funds to actually do a good job communicating with their [Woman receiving a trophy on stage]
constituency and it let the little guy mutual funds compete against the big guy
mutual funds who already had all that infrastructure of course the biggest
winner out of this entire deal yeah it was the trees especially the ones who [Tree given a first prize award]
got in early on Google
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