The amount established by the index plus the margin is called what?

The correct answer, "the calculated rate or note rate," refers to the method by which the interest rate on an adjustable-rate mortgage (ARM) is determined. In this context, the index represents a benchmark interest rate that fluctuates based on market conditions. The margin is an additional fixed percentage added to this index, established by the lender. Together, the sum of the index and the margin gives you the calculated rate or note rate, which is the interest rate that the borrower will pay over the life of the loan after any initial fixed period.

This concept is fundamental in understanding how adjustable-rate mortgages function. The calculated rate directly influences the borrower's monthly payment and overall loan cost, making it essential for both lenders and borrowers to grasp how rates are set and adjusted.

The principal rate, effective loan rate, and teaser rate refer to different aspects of mortgage interest and payment strategies and do not accurately describe the sum of an index and a margin in the context of adjustable-rate mortgages.