You bought a home with an adjustable-rate mortgage. The margin on the loan is 4.3% and the rate cap is 5.75% over the life of the loan. If the current index rate is 7.25%, what is the calculated interest rate of the ARM?

Question

Quizplus · Accepted Answer

The calculated interest rate of the ARM is the current index rate plus the margin. In this case, the current index rate is 7.25% and the margin is 4.3%, so the calculated interest rate is 7.25% + 4.3% = 11.55%.

You Bought a Home with an Adjustable-Rate Mortgage