Mortgage Glossary – I
Also know as Escrow Account.
An index is a widely published rate such as LIBOR, T-Bill or 11th District Cost of Funds (COFI). Lenders use these indices to establish the interest rates charged on mortgage loans. For Arm’s, a predetermined margin is added to the index to compute the interest rate adjustment.
Consumer safeguard, which limits the amount the interest rate on an adjustable rate mortgage, can change during the first adjustment period.
The rate charged during the first interval of an ARM loan.
Consideration in the form of money paid for the use of money.
Interest Rate Cap
A provision of an ARM limiting how much interest rates may increase per adjustment period. See also Lifetime cap.