Monday, April 21, 2008

Treasury Bill vs. LIBOR

In a reverse mortgage you will find that the loan is calculated on a percentage above the 10-year treasury bill. In most home equity loans you will find that the loan is based on LIBOR. It is important to know the difference and the value that the loan that is based on the 10-year treasury bill.

The treasury bill is is an instrument by which the government borrows money from its citizens. This means that your loan is tied to the borrowing rate of the U.S. Government.

LIBOR : Is by definition : London Inter-Bank Offered Rate : This is the rate that banks in England will exchange funds that are covered by UNSECURED loans.

This is another reason why reverse mortgages are a government entitlement. Not only has the government spent tens of millions establishing this entitlement, but it has also tied it to its own credit rating.

Bob

bob@az62.com

www.az62.com

623-214-6663

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