ARM

Question 1

Note rate

Answer 1

Initial interest rate and listed on promissory Note

Question 2

Fully Indexed rate

Answer 2

Margin + Index

Question 3

margin

Answer 3

lender’s profit on an ARM. ARM interest rate can NEVER fall below Margin

Question 4

Index

Answer 4

Makes ARM’s interest rate change. based on LIBOR, COFI, or after 1/2020 based on SOFR. SOFR is the Secure Overnight Financing Rate. LIBOR = London Interbank Offered Rate, COFI = cost of Funds index (11Th District of Fed)

Question 5

ARM Caps

Answer 5

(Initial IR/Periodic IR/Lifetime IR) The last 2 are over the lifetime. Initial if stated is amount it can change at first

Question 6

ARM are amortized over how many years

Answer 6

30

Question 7

Are ARMS closed end mortgages

Answer 7

Yes

Question 8

4 Cs

Answer 8

Foundaton criteria that MLO ise to determine laon qualification
Credit = both score and history
Capacity = Income
Cassh = liquid assets, in reserve
Collateral = property pledged as security