Definitions for

**"Index Rate"****Related Terms:**Index, Adjustable rate, Variable interest rate, Rate index, Adjustable rate loan, Adjustable-rate loan, Adjustable-rate mortgage, Adjustable rate mortgage, Arm, Variable interest, Variable rate loan, Floating interest rate, Margin, Interest rate floor, Vrm, Adjustable rate mortgages, Floating rate of interest, Variable rate mortgage, Certificate of deposit index, Variable rate, Floating rate, Arms, Capped rate, Interest rate ceiling, Reference rate, Fully indexed rate, Real interest rates, Initial interest rate, Capped rate mortgage, Rate caps, Teaser rate, Treasury index, Floating rate loan, Fixed rate, Standard variable rate, Life cap, Annual cap, Periodic cap, Interest rate cap, Svr, Caps, Change frequency, Initial rate, Fixed interest rate, Rate cap, Periodic rate cap, Conversion clause, Convertible arm, Capped mortgage, Hybrid arm

A variable interest rate that is tied to an index.

a widely-used interest rate that lenders use to set the interest rate on loans and credit cards

An index used to adjust the interest rate of an adjustable mortgage loan.

This is the interest rate of the index. If your index is 1 year treasury bond and it is at 3.40%, then that is your index rate. The index rate is added to the margin and the will give you your interest rate til the next adjustment period starts.

The rate which the interest rate on an adjustable rate mortgage is tied.

A published interest rate that is used to determine the actual rate charged with a variable rate loan, such as the "Prime Rate" as published in the Wall Street Journal. Initiation Fee(See Acquisition Fee.) Invoice Price The manufacturer's initial charge to the dealer. This usually is higher than the dealer's final cost because dealers receive rebates, allowances, discounts, and incentive awards. Generally, the invoice price should include freight (also known as destination and delivery). If you're buying a car based on the invoice price (for example, "at invoice," "$100 below invoice," "two percent above invoice"), and if freight is already included, make sure freight isn't added again to the sales contract.

securities are often used for 30-year fixed-rate loans (on average, most homeowners live in their homes for a period of time closer to 10 years than 30 years). For ARM loans, a common index is the Eleventh District Cost of Funds Index (COFI), published by the San Francisco-based district office of the Federal Home Loan Bank. For credit cards, the U.S. commercial prime rate is frequently used as an index rate.

The basis for rate changes that the lender uses to decide how much the annual percentage rate will change over time. Note: most lenders use the Wall Street Journal PRIME RATE as its index. If they don't, ask to view their rate trends for the past 2 years. Check for rate change frequency and how high their rate has climbed.

The base rate used by a lender to measure the difference between the current interest rate charged on an adjustable-rate mortgage (ARM) and that earned by other types of investments. This difference is then used to adjust the interest rate a lender will charge on an ARM. The base rate is externally set. Examples include LIBOR, the Prime Rate and Treasury indices.

A rate used by lenders that reflects general trends of national interest rates such as those on Treasury notes. When determining changes in interest rates on adjustable rate mortgages, lenders charge a set amount above the index rate.

Published, market-driven interest rate used by lenders as the basis for determining interest rate charges.

For Adjustable Rate Mortgages, when the interest rates changes, it is set to a public interest rate such as the current 2 Year U.S. Treasury Note + 1.5%.