ADJUSTMENT FREQUENCY

The frequency at which interest rate changes or resets on an adjustable-rate mortgage occur. 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.

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.