Adjustment Date

AAA

DEFINITION of 'Adjustment Date'

1. The date on which financial adjustments will be made to a contract or transaction, as agreed to by all the parties involved in the transaction.


2. Adjustment date also refers to the date on which the interest rate changes in an adjustable rate mortgage (ARM).

INVESTOPEDIA EXPLAINS 'Adjustment Date'

1. The term is most commonly used in real estate transactions, where the adjustment date refers to the agreed-upon date on which certain costs such as property taxes and interest will be adjusted between the buyer and the seller.


For example, in Canada, the interest adjustment date refers to the date from which interest is calculated if a real estate transaction closes and mortgage funds are provided by the lender before regular mortgage payments commence. If the lender provides the mortgage funds on June 25, but the buyer's monthly mortgage payments only start on July 1, the buyer has to pay an interest adjustment for the additional six days he owns the house.


2. In an adjustable-rate mortgage, the interest rate on the mortgage changes on the adjustment date to reflect current interest rates in the financial markets.

RELATED TERMS
  1. Accrued Interest Adjustment

    The extra amount of interest that is paid to the owner of a convertible ...
  2. Convertible ARM

    An Adjustable Rate Mortgage (ARM) that gives the borrower the ...
  3. Adjustable-Rate Mortgage - ARM

    A type of mortgage in which the interest rate paid on the outstanding ...
  4. Closing Costs

    The expenses, over and above the price of the property that buyers ...
  5. Fixed-Rate Mortgage

    A mortgage that has a fixed interest rate for the entire term ...
  6. Total Annual Loan Cost (TALC)

    The projected total cost that a reverse mortgage holder should ...
Related Articles
  1. Insurance

    ARMed And Dangerous

    In a climate of rising interest rates, having an adjustable-rate mortgage can be risky.
  2. Credit & Loans

    Mortgages: Fixed-Rate Versus Adjustable-Rate

    Both of these have advantages and disadvantages depending on your financial needs and prospects.
  3. Personal Finance

    Understanding Your Mortgage

    We walk through the steps needed to secure the best loan to finance the purchase of your home.
  4. Home & Auto

    Option ARMs: American Dream Or Mortgage Nightmare?

    Option adjustable rate mortgages could make or break your home-buying experience.
  5. Home & Auto

    How should you choose the amortization period for your mortgage?

    Read about key considerations that homeowners should take into account before choosing the amortization period for their mortgages.
  6. Credit & Loans

    What is the key to finding your ideal mortgage?

    Learn what steps you need to take in order to locate the perfect mortgage for your budget, lifestyle and long-term financial goals.
  7. Home & Auto

    Where are home values falling the fastest in the US, and why?

    Learn about the metropolitan areas in the United States experiencing the largest drops in median single family homes values in 2014 and the reasons behind it.
  8. FHA mortgages offer flexibility and low down payments, though they're often pricier than traditional loans backed by private mortgage insurance.
    Credit & Loans

    Before You Choose An FHA Mortgage: 7 Key Points

    FHA mortgages offer flexibility and low down payments, though they're often pricier than traditional loans backed by private mortgage insurance.
  9. Home & Auto

    How did the ABX index behave during the 2008 subprime mortgage crisis?

    Read about the disastrous performance of the various ABX indexes in the subprime mortgage crisis of 2008 during the middle of the Great Recession.
  10. FHA loans are often a good alternative for those who have trouble obtaining a conventional mortgage, although you do have to pay an insurance premium.
    Home & Auto

    Mortgage For A Manufactured Home? Try The FHA

    FHA loans are often a good alternative for those who have trouble obtaining a conventional mortgage, although you do have to pay an insurance premium.

You May Also Like

Hot Definitions
  1. Christmas Tree

    An options trading strategy that is generally achieved by purchasing one call option and selling two other call options at ...
  2. Christmas Club

    A short-term savings account that usually pays out the full account balance to its account holders once each year, right ...
  3. Boston Snow Indicator

    A market theory that states that a white Christmas in Boston will result in rising stock prices for the following year. For ...
  4. Christmas Island Dollar

    The former currency of Christmas Island, an Australian island in the Indian Ocean that was discovered on December 25, 1643. ...
  5. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  6. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
Trading Center