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Houston Mortgage > Glossary >
Home Equity > # 1-10
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1 month LIBOR rate
LIBOR stands for London Interbank Offered Rate. It's the rate of interest at which banks offer to lend money to one another in the wholesale money markets in London for one month. It is a standard financial index commonly used as a benchmark for adjustable rate mortgages. LIBOR rates tend to move in closer concert with global interest rate benchmarks, such as the federal funds rate, and is a more volatile index than the Monthly Treasury Average.
11th District Cost of Funds
A monthly cost-of-funds index (COFI) reflecting the weighted-average interest rate paid by 11th Federal Home Loan Bank District savings institutions for savings and checking accounts. The 11th district covers Arizona, California and Nevada. The index is published on the last day of the month and reflects the cost of funds for the prior month. The 11th District COFI is commonly used as an index for adjustable-rate mortgages.
182-day T-bill auction average discount rate
The U.S. government issues short-term debt at a discount at a competitive auction, usually on a weekly basis. At a discount means the note is sold at a discount from face value and then redeemed at maturity at the full face value. The difference between the discounted price and the face value determines the yield. The yield on 182-day Treasury bills is the average discount rate.
80-10-10 loan
A combination of an 80 percent loan-to-value first mortgage, a 10 percent home equity loan and a 10 percent down payment. The loans can be used to eliminate the need for private mortgage insurance. Alternatively, a buyer of an expensive home can use one to eliminate the need for a jumbo mortgage by reducing the first mortgage to the conventional limit.
91-day T-bill auction average discount rate
The U.S. government issues short-term debt at a discount at a competitive auction, usually on a weekly basis. At a discount means the note is sold at a discount from face value and then redeemed at maturity at the full face value. The difference between the discounted price and the face value determines the yield. The yield on 91-day Treasury bills is the average discount rate.
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