| Title: | Market Investing |
| Moderator: | 2155::michaud |
| Created: | Thu Jan 23 1992 |
| Last Modified: | Thu Jun 05 1997 |
| Last Successful Update: | Fri Jun 06 1997 |
| Number of topics: | 1060 |
| Total number of notes: | 10477 |
Could somebody please explain what the INDEX MARGIN is and what it is
based on?
The reason I ask is because I am looking in an ARM for a mortgage
that is convertable after the first year. The bank says that you can
convert after the 1st year of an ARM to a fixed mortgage. The fixed
% of the loan is based on what the INDEX MARGIN is the day you want to
convert.
I was told todays INDEX MARGIN is 2.875. I'm looking at a 1st rate of
3.875 and maybe converting to a fixed 1 year from now which would be
a 3.875 plus whatever the index margin will be a year from now..
| T.R | Title | User | Personal Name | Date | Lines |
|---|---|---|---|---|---|
| 436.1 | Hope this helps | PCCAD::DINGELDEIN | PHOENIX | Fri Apr 02 1993 14:49 | 7 |
The index margin is the amount added to your base index to come up with
your actual interest rate. The majority of ARM's are based on the
one-year t-bill rate averaged to maturity. Presently around 3.5 % or
so. The margin is defined in your mortgage contract. My ARM has a 2.5%
margin. If my mortgage was adjusted today you would take the index
(3.5%) and add the margin (2.5%) to get my new interest rate of 6%.
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