What is the ARM adjustment period?
The frequency with which your interest rate may change is called the initial note adjustment period. The most common ARM adjustment periods are every 6 months or every 12 months. The frequency of ARM adjustments is established at the time of application and the terms will be outlined in your ARM note. There are ARM products available where the initial interest rate will be fixed for the 1st, 3rd, 5th, 7th or 10th years, and then adjust annually thereafter for the life of the loan. There are also loan products available where the interest rate changes monthly, but the principal and interest payment change annually.
The frequency with which your interest rate may change is called the initial note adjustment period. The most common ARM adjustment periods are every 6 months or every 12 months. The frequency of ARM adjustments is established at the time of application and the terms will be outlined in your ARM note.
An Adjustable Rate Mortgage does not adjust constantly. Instead, the rate and mortgage payment adjust after a given time know as the adjustment period. The most common adjustment period is 1 year where once a year, the loan rate adjusts to the index + margin. Some adjustment periods are as low as one month, but these are very rare.
