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What is a Margin?

April 26, 2017margin

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What is a Margin?

4 Answers

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The margin is the number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment.

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Margin is essentially collateral for a position. If the market moves against a customer’s position, NTWO CAPITAL MARKETS will request additional funds through a “margin call.” If there are insufficient available funds, NTWO CAPITAL MARKETS will immediately close out the customer’s open positions.

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A margin is the addition of a few percentage points that lenders add to the index rate to determine the interest rate on an ARM. Always consider the margin when comparing ARM because it may significantly affect your interest rate.

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A – The increment above the index that is paid, such as prime + 2%.