Mortgage Glossary
Index
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
An index is a published benchmark interest rate that an adjustable-rate mortgage uses to set its rate after the fixed period.
What Index means
Common indexes include SOFR and the 1-year Treasury. When the ARM adjusts, the new rate equals the current index value plus the lender's fixed margin, subject to caps.
Florida example
A Florida ARM tied to SOFR adjusts as that index moves. If SOFR is 4.5% and the margin is 2.25%, the fully indexed rate is 6.75%, which is what the borrower pays after the initial fixed years end.
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