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INVESTING IN REAL ESTATE

By Augustine Afriyie

The interest rate is tied to the movement of an index, such as the cost-of-funds index for federally chartered lenders. Most indexes are tied to U.S. Treasury securities.

Usually the interest rate is the index rate plus a premium, called the margin, which is the lender’s cost of doing business, such as profits and costs. For example, the loan rate may be 2 percent over the U.S. Treasury bill rate.

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