I recently bought a home and took out an adjustable-rate mortgage. I understand that this means the interest rate can change, which can make the payments go up or down. How will I know when my payment amount changes?
You'll get a notice before the interest rate initially adjusts, and before each subsequent interest rate adjustment, letting you know that the payment is changing.
Under federal mortgage servicing law, the creditor or servicer must send you a notice when your payment changes due to an interest rate adjustment. (12 C.F.R. § 1026.20).
What is a creditor? The creditor is the owner of the loan. The creditor might be the original lender or a subsequent owner of the loan.
What is a mortgage servicer? Mortgage servicers process loan payments and manage loan accounts on behalf of the owner of the loan.
The first time the interest rate adjusts, the creditor or servicer must send you a notice at least 210 days, but not more than 240 days, before the first payment at the new adjusted level is due.
Each time the interest rate subsequently adjusts and results in a change to the payment amount, the creditor or servicer must send you a notice at least 60 days, but no more than 120 days, before the first payment at the adjusted level is due.
The creditor or servicer does not have to send a rate adjustment notice in the following situations.