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May 23, 2006
Adjustable Rate Mortgages - Advantages and
An ARM is a mortgage that has an interest rate that adjusts periodically, often every six or 12 months. At these intervals, the interest rate is adjusted using an index and a margin. The index is a financial index that is used to gage general interest rate trends. Treasury Bills (T-Bills), Certificates of deposit (CDs), The 11th District Cost of Funds Index (COFI), and others are examples of financial indexes that are often used to determine interest rates. The margin is the markup that the lending institution places on their loans; put bluntly it's the cost that they charge borrowers to use their money. The index is then added to the margin resulting in the interest rate the borrower
From Adjustable Rate Mortgages - Advantages and
Posted by Guido at May 23, 2006 05:58 PM
