Indexed ARMs
Adjustable rate mortgages on which the interest rate is mechanically determined based on the value of an interest rate index. Indexed ARMs are distinguished from Discretionary ARMs, in that the first provides the lender with zero discretion in setting future interest rates, while the latter provides the lender with complete discretion. All ARMs discussed in Adjustable Rate Mortgage (ARM) are indexed ARMs, which is the only kind used in the U.S.
Popular Mortgage Terms
A borrower, usually refinancing rather than purchasing a home, who allows a lock to expire when interest rates go down in order to lock again at the lower rate. ...
The date on which the closing occurs. On a purchase transaction, there is no financial advantage to the buyer/borrower in closing on any day of the month, as compared to any other day. ...
Loan applications that are withdrawn by borrowers, because they have found a better deal or for other reasons. ...
The maximum allowable ratio of loan-to- value (LTV) on any loan program. Generally, these are set by mortgage insurers or by lenders and can range up to 100%, although some programs will ...
A request for a loan that includes the information about the potential borrower, the property and the requested loan that the solicited lender needs to make a decision. In a narrower sense, ...
The monthly index is a ratio of monthly interest costs to total funds, expressed as a percentage. Annualized interest, the numerator, is calculated by multiplying the deposit balances at ...
A sale price below market value, where the difference is a gift from the sellers to the buyers. Such gifts are usually between family members. Lenders will usually allow the gift to count ...
A documentation rule where the borrower discloses income and its source but the lender does not verify the amount. ...
A mortgage lender that sells all the loans it originates in the secondary market. ...
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