Reset Rate

See: Reset Date.

When we first got into this whole homebuying thing, we stayed away from variable rate mortgages. They frightened us, because how would we ever know how much interest we were going to be charged if the rate kept changing every five seconds? Too scary, too unpredictable.

As it turns out, though, that’s not really how variable rate mortgages work. Sure, the interest rate can change, but it doesn’t do it all willy-nilly, and on a constant and unending basis. It usually adjusts, or resets, on a predetermined schedule, like every month or quarter. And it’ll only change if the underlying indexed rate changes. So if there’s no increase or decrease there, we won’t see an increase or decrease in our interest rate either.

Anyway, whenever the rate does adjust, whether on the first of the month or two days after every third blue moon (which would be a little weird), that date is referred to as the “reset date.” And the new interest rate we’re going to pay until the next reset date is called the “reset rate.” If we’ve got a variable rate mortgage and are wondering when our own reset rates are scheduled to kick in, we should refer to our paperwork and/or consult with our lender.