General Mortgage KnowledgeQuestion 115 of 400
On an ARM, the fixed percentage the lender adds to the index to determine the interest rate is the:
a.Cap
b.Index
c.Margin
d.APR
Explanation
The margin is the lender's fixed markup added to the index; it stays constant for the life of the loan. The index varies, caps limit changes, and APR reflects total borrowing cost expressed as a yearly rate.
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