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one home to another. The risks If a borrower is inconsistent in their on time payment history, afflicted by tragedy which causes a credit problem, or keeps insufficient funds in reserve (the payment savings from the com en equity home language loan site rate for example), as referenced above, the rates in Hybrid ARMs will certainly rise, and with insufficient credit com en equity home language loan site income, the borrower may be forced to trade equity for time, and in some markets, not as advantageously as today. Terminology Fully Indexed Rate - The price of the ARM as calculated by adding Index + Margin = Fully Indexed Rate. This is the interest rate your loan would be at without a Start Rate (the introductory special rate for com en equity home language loan site initial fixed period). This means, your loan would be higher today if it was adjusting, typically, com en equity home language loan site higher than the introductory rate. Calculating this is IMPORTANT for ARM buyers, since it helps you predict the future interest rate of your loan. Margin - This refers to the banks profit margin above the value of the financial index. The bank seeks to make a profit above the costs of inflation. The index is a measure of the cost of funds as measured by inflation. Index - A publicly published financial index such as LIBOR (usually 1 month, com en equity home language loan site month or 12 month), 11th District Cost of Funds Index, MTA, etc. Start Rate - The introductory rate com en equity home language loan site to purchasers of ARM loans for the initial fixed interest period. The difference between the "Start Rate" of an ARM and the rate of a fixed terms loan is that the "Start Rate". Period - This is the frequency of adjustments, the longer the rate remains fixed, the better the loan is for the borrower. Typically, the shorter this is the lower the rate, since there com en equity home language loan site more opportunities to adjust upwards. Floor -