If an adjustable-rate mortgage is described as a 5/2/6 loan, what does the first number indicate?

In the context of an adjustable-rate mortgage (ARM) described as a 5/2/6 loan, the first number represents the initial interest rate adjustment period. This means that the interest rate will remain fixed for the first five years of the loan term before it begins to adjust. During this initial fixed period, the borrower will benefit from predictable monthly payments, which can help with budgeting and financial planning.

The subsequent numbers in the description provide additional information about how the interest rate will adjust after this initial period. Specifically, the second number indicates how much the interest rate can change at each subsequent adjustment after the initial fixed period, while the third number signifies the maximum interest rate adjustment over the life of the loan. This structured format helps borrowers understand the dynamics of their mortgage and expectations for payment fluctuations over time, beginning with a stable initial phase.