Who Says You Can\'t Buy a Home! These days, approximately one in five mortgage applicants opts for an adjustable-rate mortgage (ARM). The element of an ARM least easily understood is the index. With an ARM, two main factors determine the rate you pay: the index and the margin. The index is a rate set by market forces and published by a neutral third party. The margin is an agreed-upon number of percentage points that is added to the index to determine your rate. A thorough mortgage shopper will run across a bunch of acronyms to denote various ARM indexes, such as COFI, LIBOR, MAT and CMT. Each index responds at its own peculiar pace to the economy’s ups and downs.

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