CAP in adjustable rate mortgages (ARMs) refers to a limit placed on adjustments to protect the borrower from large increases in the interest rate or the payment level. There are different types of caps, including annual caps, lifetime caps (life-of-loan caps), and payment caps. This measure helps borrowers by providing predictability and stability in their mortgage payments.
The Cost of Funds Index (COFI) is a commonly used benchmark for adjusting interest rates on adjustable-rate mortgages (ARMs) in the United States. It reflects the average cost of funds deriving from savings institutions in Western 11th Federal Reserve District, including California, Arizona, and Nevada.
Conversion in real estate refers to various forms of changing the use, ownership, or financing structure of a property. This can include transforming rental apartments into condominiums, involuntary taking of property, changing the ownership structure of financial institutions, or altering the terms of a mortgage.
The Cost of Funds Index is a published data series that reflects the average interest expense incurred by savings institutions for borrowing funds. Known for its use in determining rates for adjustable-rate mortgages, COFI is a significant benchmarking tool for lenders.
The fully indexed rate in the context of adjustable-rate mortgages (ARMs) refers to the interest rate determined by the sum of the current value of an index and a margin applied to the loan. This rate dictates the monthly mortgage payments after initial rate periods and caps are considered.
An index is a statistical measure that indicates some current economic or financial condition. Indexes are often used to make adjustments in wage rates, rental rates, loan interest rates, and pension benefits set by long-term contracts.
The Interest Rate Reduction Refinance Loan (IRRRL) is a program offered by the Veterans Administration that allows eligible service members to refinance their existing VA loans to lower-interest, fixed-rate mortgages.
LIBOR, or the London Interbank Offered Rate, is the interest rate at which major international banks lend Eurodollars to one another. It is widely used as a benchmark for adjustable-rate mortgages and other financial products.
A Renegotiated Rate Mortgage (RRM) allows borrowers to renegotiate the interest rate of their existing mortgage, often providing an opportunity to lower monthly payments and overall interest costs.
