Adjustment Frequency is the time period, in months, when the reset rate is effective on an Adjustable Rate loan.
- Example 1: If the loan has a 60 month initial period, reset for 60 months (so called 5-5 adjustable) and a term of 120 months, enter 60. Since there is only one reset period in this example, some users may want to enter 1, but doing so means that the rate would reset monthly, and cause problems with cost of funds calculations. Only enter 1 if the rate after the initial period is floating and can reset on a monthly or more frequent basis.
- Example 2: If the term of the loan is 96 months with an initial period of 36 months and an adjustment period of 24 months, enter 24 for the adjustment frequency, even though the last adjustment might only be for 12 months (see table below).
Months Rate 1-36 Fixed Rate 37-60 Index+Spread from month 37 61-84 Index+Spread from month 61 85-96 Index+Spread from month 85