David Saks: The Index : We're Not Talking About the Finger Next to the Thumb

David Saks - Real Estate Broker - The Real Estate Mart of Tennessee, Inc. - 4040 North Watkins-Suite #4 - Memphis, Tennessee 38127 - Phone (901) 357-4663

The Index : We're Not Talking About the Finger Next to the Thumb


Lender's have had to have some kind of way to determine what the rates are going to be for adjustable rate mortgages.

We could say that rates are determined by the costs of Milk Duds or Junior Mints at the candy counter at the theater. If that were the case, no one could afford a loan. :-)

The reality of the matter is that the rate is based on what we call an Index.

What we perceive to be the most common form of index in the United States is the index of the United States Treasury Securities .

One examp-le is what we refer to as the One Year Treasuries Securities Index.

This is essentially a digest of the rates on one year treasury securities adjusted to a constant maturity level, or the date upon which the financial obligation has to be repaid.

Some other indexes which you might want to study, by searching the web for additional information, include:

FHLBB : Federal Home Loan Bank Board Index

COFI : The Costs of Funds Index

LIBOR : The London Interbank Offered Rate

TABAPI : The Tennessee Averaged Bicycle Air Pressure Index (no such thing, just funnin' with you)

All kidding aside, the Treasuries Securities Index is by wide and far the most widely accepted and used, changes once a week and is reported by the Fedreral Reserve Bank.

The adjustment of the amount on any adjustab;e rate mortgage is at the mercy of the direction of the index in any week that the lender makes a change in the rate.

Spend quality education time talking to about the index.

Can you add any other indexes the list?

David Saks

Time&Temp Memphis

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Comment balloon 0 commentsDavid Saks • May 25 2008 08:31PM


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