Adjustment Frequency

Adjustment Frequency

How often the interest rate changes or resets on an adjustable-rate mortgage. Different adjustable-rate mortgages have different adjustment frequencies. Typically, the adjustment frequency is once a year, but it can be as often as once a month or as infrequent as once every five years.

Notes:

The lower the rate-adjustment frequency, the lower the financial risk for the borrower. To compensate for lower interest rates in the future and thus lower margins, the lender will usually expect the borrower to pay a higher initial interest rate before the first reset date.

See also: Adjustable-Rate Mortgage - ARM, Fixed Interest Rate Mortgage, Interest Rate, Margin, Mortgage, Mortgage Broker, Negative Amortization Loan, Variable Interest Rate