Definition: A fully indexed option payment is a principal and interest payment. The interest rate is computed by adding the monthly index rate to the mortgage loan's fixed margin rate. Fully indexed payments are a feature of an Option ARM mortgage loan. If the borrower pays the fully indexed loan payment every month on a 30-year loan, two things will happen. First, the loan balance will reduce every month. Second, the loan will be paid off at the end of 30 years.
Fully Indexed Option Payment
By Elizabeth Weintraub, About.com
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