If you keep hearing the word, “index” being thrown around in terms of interest rates and aren’t exactly sure what the term means, you’ve come to the right place! We’ve been exploring the world of interest rates over the last week and are focusing on the term “index” in today’s post.

The index is a daily published rate (you’ve probably heard of Prime, T-Bill or LIBOR before, all of which are indexes used in the pricing of loans) in which lenders use to base the final rate for a loan. In the case of a mortgage loan. The most common use of an index is with an adjustable rate mortgage (ARM), where the rate of the loan is based on an index plus a margin. While the margin may be a fixed amount, the index can change over time, causing the rate on the loan (and its payment) to change as well.

You can track your lender’s index rate to measure trends and monitor current market conditions which can ultimately assist you with financing or refinancing your loan for the best rate.

Check out our current rates! Call us toll free at 800-466-LOAN or send us a note and schedule an appointment with a loan officer.