(1) A maximum amount of charge. Example: an adjustable rate mortgage with a 5% rate cap could not adjust the interest rate by more than 5% (2) a fitting used to seal, such as by a plumber to seal (cap) a pipe end. (3) a cornice, lintel, or top of a structural member such as a column.
Cap
A provision of an ARM limiting how much the interest rate or mortgage payments may increase.
