Indexed ARM

"Start with the ARM," said the cannibal.

But we'll start with ARM=Adjustable Rate Mortgage.

The Indexed part of the ARM here has to do with the way in which the "adjustable" part is calculated. That is, adjustable mortgages...adjust...to a given index, often LIBOR. As in, "The rate shall change in accordance with the indexed trailing average of month-end rates of LIBOR as reported by The Wall Street Journal's Investing section."

The new rate you'll pay on your mortgage each month might be something like 50 basis points above whatever LIBOR's trailing 3-month indexed average was.

So here's to low rates and cheap home ownership. Welcome to The American Dream.