If the index is 1.25% and the margin is 2.75%, the rate would be 4.00%, absent of anything else.
If your initial rate is less than 4.00% (example 3.5% for the first 5 years), you have a discounted rate
If your initial rate is greater than 4.00% (example 4.5% for the first 5 years), you have a premium rate
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Integrity. With it, nothing else matters. Without it, nothing else matters.