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.
What an index is
An index is the published rate that an adjustable-rate mortgage follows. When the index moves, your rate can move with it after the fixed period ends.
Common indexes include SOFR and the Treasury rate. Your loan adds a set margin on top of the index.
Why it matters
The index drives how your ARM payment changes over time. A stable index means smaller swings in your rate.
We explain how each ARM is built before you sign. Apply now and we will show how your rate could move.
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