On which of the following adjustable-rate loans must the bank use an index beyond its control?
On which of the following adjustable-rate loans must the bank use an index beyond its control?
A loan to purchase a duplex where the borrower will live in one of the units is an adjustable-rate loan where the bank must use an index beyond its control. This is because such loans are often tied to external indexes like the London Interbank Offered Rate (LIBOR) or similar indexes, which are standard practices for determining interest rates for such types of properties.
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In this scenario, the bank would typically use an index beyond its control to determine the interest rate for the adjustable-rate loan. This is because the interest rate on loans for rental properties is often tied to broader market indexes, such as the London Interbank Offered Rate (LIBOR) or the Cost of Funds Index (COFI), which are not directly controlled by the bank.