General Mortgage KnowledgeQuestion 103 of 400
An ARM has an index of 3.50% and a margin of 2.25%. Ignoring caps, what is the fully indexed rate?
a.2.25%
b.5.50%
c.5.75%
d.3.50%
Explanation
Fully indexed rate = index + margin = 3.50% + 2.25% = 5.75%. The margin (2.25%) and index (3.50%) alone are not the rate, and 5.50% miscalculates the sum.
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