We offer a 5/1 ARM and the index rate is our 1 year ARM. We tend to change the 1 year and 5/1 ARM rate every couple of weeks. We give the borrower the benefit of the whichever rate is lower-the rate at the application or the rate in effect once we are scheduling the closing. If our index rate changes but we still give the borrower the original 5/1 ARM rate, this will impact the APR. My first thought would be to continue using the original index rate that corresponded to the 5/1 ARM rate, however, another staff member believes we should use the most current index information regardless of the rate we are giving the customer. I want to make sure I am doing this correctly given the MDIA APR tolerance issues that are coming up shortly.

Thank you for any help!!

when the loan closes you are supposed to use the index for the day of closing.