<P> Among the most common indices are the rates on 1 - year constant - maturity Treasury (CMT) securities, the cost of funds index (COFI), and the London Interbank Offered Rate (LIBOR). A few lenders use their own cost of funds as an index, rather than using other indices . This is done to ensure a steady margin for the lender, whose own cost of funding will usually be related to the index . Consequently, payments made by the borrower may change over time with the changing interest rate (alternatively, the term of the loan may change). This is distinct from the graduated payment mortgage, which offers changing payment amounts but a fixed interest rate . Other forms of mortgage loan include the interest - only mortgage, the fixed - rate mortgage, the negative amortization mortgage, and the balloon payment mortgage . </P> <P> Adjustable rates transfer part of the interest rate risk from the lender to the borrower . They can be used where unpredictable interest rates make fixed rate loans difficult to obtain . The borrower benefits if the interest rate falls but loses if the interest rate increases . The borrower benefits from reduced margins to the underlying cost of borrowing compared to fixed or capped rate mortgages . </P> <Ul> <Li> 11th District Cost of Funds Index (COFI) </Li> <Li> London Interbank Offered Rate (LIBOR) </Li> <Li> 12 - month Treasury Average Index (MTA) </Li> <Li> Constant Maturity Treasury (CMT) </Li> <Li> National Average Contract Mortgage Rate </Li> <Li> Bank Bill Swap Rate (BBSW) </Li> </Ul> <Li> 11th District Cost of Funds Index (COFI) </Li>

Key features of the va adjustable rate mortgage include all of the following except