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The City gave them the Bridgeman Russell building for a dollar. If you intend it as a reduction of principal but don't inform the lender, the lender may interpret it as the May payment sent early, in which case the lender gets the interest on the $600 during April instead of you. Using an index to determine future rate adjustments provides you with assurance that rate adjustments will be based on actual market conditions at the time of the adjustment.
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