Adjustment Interval

AAA

DEFINITION of 'Adjustment Interval'

The amount of time between interest rate changes to an adjustable rate mortgage (ARM). Most ARMs have two adjustment intervals. The first interval is typically longer (usually 3,5,7 or 10 years) during which there is a fixed rate of interest and payment. This initial interval is followed by periodic adjustments to the interest rate (usually every 6 months or year) throughout the remainder of the loan.

INVESTOPEDIA EXPLAINS 'Adjustment Interval'

An example of this would be a 3/1 ARM. The first number denotes the initial period of time in which the interest rate and payment remain fixed followed by the second number denoting the subsequent adjustment intervals. In this example, the interest rate and payment remains the same for the first three years of the loan, after which it can adjust every year.

RELATED TERMS
  1. Seasonal Adjustment

    A statistical technique designed to even out periodic swings ...
  2. 2/28 Adjustable-Rate Mortgage - ...

    A type of adjustable-rate mortgage that has a two-year fixed ...
  3. Hybrid ARM

    A hybrid adjustable-rate mortgage blends the characteristics ...
  4. Payment Option ARM Minimum Payment

    An option to make minimum payments on an payment option ARM, ...
  5. Flexible Payment ARM

    A type of adjustable-rate mortgage that allows the borrower to ...
  6. Nontraditional Mortgages

    A broad term describing mortgages that do not take the traditional ...
Related Articles
  1. ARMed And Dangerous
    Insurance

    ARMed And Dangerous

  2. Financing Basics For First-Time Homebuyers
    Home & Auto

    Financing Basics For First-Time Homebuyers

  3. Mortgages: Fixed-Rate Versus Adjustable-Rate
    Credit & Loans

    Mortgages: Fixed-Rate Versus Adjustable-Rate

  4. Understanding Your Mortgage
    Personal Finance

    Understanding Your Mortgage

comments powered by Disqus
Hot Definitions
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  2. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  3. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  4. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  5. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  6. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
Trading Center