Reset Rate

Filed Under:
Dictionary Says

Definition of 'Reset Rate'


The new percentage of interest that a mortgagor must pay on the principal of an adjustable rate mortgage when the reset date arrives and the prescheduled interest rate change goes into effect. The mortgage contract explains when the rate resets and how the new rate is calculated. When the rate resets, the new interest rate may be higher or lower than the initial interest rate depending on market conditions.

Investopedia Says

Investopedia explains 'Reset Rate'


Adjustable rate mortgages have a fixed interest rate for an initial period that commonly ranges from one to five years. When this period ends, the interest rate is reset based on a market rate of interest using a benchmark such as the rate of one-year Treasury bonds or the London Interbank Offered Rate. The lender adds an additional percentage to that benchmark rate. The margin rate does not change, but the market rate does.

comments powered by Disqus
Hot Definitions
  1. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  2. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  3. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  4. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  5. Momentum Investing

    An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.
  6. Momentum Investing

    An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.
Trading Center