Definition: The contractual percentage added to an adjustable-rate mortgage's index to calculate its fully indexed interest rate before relevant caps or other limits.
Example
An ARM with a 3.75% index and a 2.25% margin has a 6% fully indexed rate.
Keep the distinction clear
The margin is not the annual percentage rate and is not a cap. The index changes under its market measure; the margin generally remains fixed by contract.
Related terms
Index Rate (ARM) · Adjustable-Rate Mortgage (ARM) · Interest
Keep studying
Mortgages: Borrower, Lender, Ownership, and Key Clauses
References: California DRE: real estate glossary · CFPB: mortgage key terms
Pronunciation (US): MAR-jin (capitals show stress)
Pronunciation reference: Merriam-Webster
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