Adjustable Rate Mortgage (ARM)
A mortgage that permits the lender to adjust the interest rate periodically on the basis of movement in a specified index.
Annual Percentage Rate (APR)
The APR is an interest rate that is based on a loan amount of $200,000 for a 30-year loan, minus the required closing costs.
Cap (Payment)
Limits the monthly payment amount that can be charged to a Member. The first cap applies to the first year, the second cap applies, to subsequent caps, the last cap is the lifetime cap—the maximum Note Rate to which an ARM may adjust over the life of the loan. The lifetime ceiling rate is determined by adding a Life Cap to the Initial Note Rate.
Conforming Loan
Loan amount may vary and depend on the property location as defined by the Federal Housing Finance Agency.
Discount Points
Expressed as a percentage of the loan amount, discount points are used to buy down interest rate.
Fixed Rate
A mortgage having a rate of interest which remains the same for the life of the loan.
Index
An indicator for determining interest rate changes on ARMS.  The index CU SoCal has chose is the One Year Constant Maturity Treasury Rate (CMT).
Interest Only Option
The scheduled monthly mortgage payment, the payment the borrower is required to make, consists of interest only.
Interest Rate
The rate of interest in effect for the periodic installment due as stated in the Promissory Note.
Jumbo Loan
Loan amounts that exceed the conforming loan limit.
Loan-to-Value (LTV)
The percentage relationship between the amount of the loan and the appraised value and/or purchase price. Financial institutions establish maximum loan advance ratios using the lesser of the appraised value or sale price.
Margin
The number of percentage points added to the Index to calculate the ARM interest rate at each adjustment. It is the difference between the interest rate and the index. The margin remains stable over the life of the loan.
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