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Call Us Today! 800-965-9910
September 09, 2010
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| Initial rate period |
| The number of months for which the initial rate holds. On ARMs this period can range from 3 months to 10 years, but on an FRM the initial rate holds for the life of the loan. |
| Interest rate adjustment period |
| The frequency of rate adjustments on an ARM after the initial rate period is over. The rate adjustment period is sometimes but not always the same as the initial rate period. As an example, using common terminology, a 3/3 ARM is one in which both periods are 3 years while a 3/1 ARM has an initial rate period of 3 years after which the rate adjusts every year. |
| Interest rate ceiling |
| The highest interest rate possible under an ARM contract; same as "lifetime cap." It is often expressed as a specified number of percentage points above the initial interest rate. |
| Interest rate decrease cap |
| The maximum allowable decrease in the interest rate on an ARM each time the rate is adjusted. It is usually 1 or 2 percentage points. |
| Interest rate floor |
| The lowest interest rate possible under an ARM contract. Floors are less common than ceilings. |
| Interest rate increase cap |
| The maximum allowable increase in the interest rate on an ARM each time the rate is adjusted. It is usually 1 or 2 percentage points. |
| Interest rate index |
| The specific interest rate series to which the interest rate on an ARM is tied, such as "Treasury Constant Maturities, 1-Year," or "Eleventh District Cost of Funds." All the indices are published regularly in readily available sources. |
| Interest rate Margin |
| The amount added to the interest rate index, ranging generally from 2 to 3 percentage points, to obtain the fully indexed interest rate on an ARM. The margin is the constant. |
| Investor |
| A borrower who owns or purchases a property as an investment rather than as a primary residence. |
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| 11255 Olive Blvd. • St. Louis, MO 63141 • Phone: 314-995-9919 • Toll Free: 800.965.9910 • Fax: 314-995-7133 • Email: info@cornerstonestl.com |
| St. Charles Office • 3449 Pheasant Meadow Dr. Suite 101 • O'Fallon, MO 63368 • Phone: 636.978.8180 • Toll Free: 800.978.9959 • Fax: 636.978.9747 |
| St. Louis South Office • 12300 Old Tesson Rd, Suite 400-E • St. Louis, Mo 63128 • Phone: 314.842.9919 • Toll Free: 877.842.9918 • Fax: 314.842.9897 |
| St. Louis South City • 4643 Gravois Road, St. Louis, MO 63116 • Phone: 314-353-3000 • Fax: 314-352-7292 |
| D/B/A Cornerstone Home Loans, Inc. - in the states of Illinois, California |
| Illinois Residential Mortgage Licensee MB5807 • Illinois Department of Financial and Professional Regulation • 310 South Michigan Ave., Suite 2130 • Chicago, IL 60604 • 312-793-3000 |
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