Initial Interest Rate Definition

Many adjustable rate mortgages or and all graduated rate mortgages start out with an initial interest rate this is less than the eventual interest rate. The initial interest rate is in effect for the period between the initial mortgage payment and the first rate change. For adjustable rate mortgages, it is possible that the initial interest rate is higher than the first adjusted rate, but this is rare. Buyers should be aware that if their mortgage interest rate increases the monthly payment amount will also increase-and sometimes to a remarkable degree.