How often does an adjustable-rate mortgage typically adjust?

An adjustable-rate mortgage (ARM) adjusts periodically based on specific terms set forth in the loan agreement. This means that the timing and frequency of interest rate adjustments can vary widely depending on the specifics of the mortgage product chosen. Some ARMs might adjust monthly, others could adjust annually, or even after longer intervals, such as every five years.

This flexibility is a defining characteristic of adjustable-rate mortgages, allowing borrowers to have payments that may initially start lower than fixed-rate mortgages, with adjustments made based on market interest rates at intervals that are clearly outlined in the loan documentation. Therefore, the correct response accurately reflects the fundamental nature of ARMs, emphasizing that the adjustment frequency is determined by the loan terms rather than a fixed schedule.