An interest adjustment is a closing cost that only some homebuyers have to pay. To be more specific, payments on a Variable Rate Mortgage (VRM) can vary throughout its term depending on what happens with the Prime Rate of your lender – that’s why it’s called variable. On your mortgage funding date, the initial interest rate is set, locking in the interest rate spread. Every three months after that (referred to as the Interest Rate Adjustment Date), the interest rate on your VRM is subject to review and possible adjustment, either up or down, if the prime rate changes. If there is a change in your interest rate, we will mail you an update outlining your new rate and the change in your payment.