Delaware Mortgage Loans

Fully Indexed Rate – What is it?
       When you get an Adjustable Rate Mortgage (ARM) you get an initial rate that is fixed for a certain period of time say five years for example.   After the first five years of the loan, your interest will begin to adjust based on two [...]

Margins
On an adjustable rate loan, the amount a lender adds to the index in order to determine the mortgage interest rate at each adjustment period. For example, if the index is at 5.0, and the margin is 1.5, the fully indexed interest rate is 6.5%. The margin is normally fixed for the life of the [...]

Negative Amortization
Amortization is the repayment of a loan by making systematic payments over a set time period which are applied to the combined balance of the principal and interest for that loan amount. Therefore, negative amortization occurs when the payment is less than the required interest that has accrued on the loan for that month.
Summary:
Few [...]

Federal Discount Rate

The Federal Discount Rate is the interest rate charged by a Federal Reserve Bank to its eligible member banks and financial institutions when they need to borrow funds directly from the Federal Reserve.  Banks whose reserves fall below the reserve requirement set by the Federal Reserve’s Board of Governors use that money to [...]

Prime
Wall Street Journal (WSJ) Prime Rate
This is a consensus measure of the Prime Rate, and is published in the Wall Street Journal. The Wall Street Journal surveys the large banks and then publishes their consensus “Prime Rate”, or the rate offered to clients who are considered eligible for “prime” financing terms. The Prime Rate will [...]

COSI
Cost of Savings Index (COSI)
A bank receives money from consumers in the form of deposits, and then lends money as home mortgages or other loans. The interest rates in effect on these deposits are the basis for the COSI index. It is not based on actual interest paid, but rather the weighted annualized average of [...]

1 Year T-Bill
One-Year/12-Month Constant Maturity Treasury (CMT)
This is an index published by the Federal Reserve Board based on the average yield of a range of Treasury securities, all adjusted to the equivalent of a one-year maturity. The US Treasury determines the yields on these securities by using the “daily yield curve”. The daily yield curve [...]

COFI
Cost of Funds Index (COFI)
This is a monthly cost-of-funds index (COFI) reflecting the weighted-average interest rate paid by a particular Federal Home Loan Bank District savings institution on savings and checking accounts. The 11th District is the one most commonly used, which covers Arizona, California and Nevada. The COFI index is published on the last [...]

MTA
Monthly Treasury Average (1 year MTA)
This index is determined by averaging one-year Treasury bills each month over the prior 12 month time period. This is an index used to set the cost of various variable-rate loans, particularly adjustable-rate mortgages. The use of the 1-Year MTA as a loan index is relatively new. The MTA generally [...]

LIBOR
London Inter-Bank Offered Rate (LIBOR)
LIBOR is the rate of interest that member banks of the British Bankers’ Association charge when they lend money to one another in the wholesale money markets in London, somewhat similar to our Fed Funds Rate. In fact, the LIBOR tends to closely track the US Fed Funds Rate. LIBOR is [...]