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Adjustment date: The day when something in a contract or agreement changes. For example, in real estate, it's the day when the interest rate on a mortgage changes. This happens because the interest rate is usually fixed for a certain period, and then it's adjusted to match the current market rate. The adjustment date is also when the costs of a real estate transaction are calculated and shared between the buyer and seller. This includes things like property taxes and utilities. Mortgage funds are usually given out on the adjustment date, and interest starts accumulating from that day. Buyers try to schedule their closing date as close to the adjustment date as possible to avoid paying interest before they take possession of the property. The possession date and adjustment date are usually the same day, and the buyer starts paying for things like property taxes and utilities from that day onwards.
Adjustment date is a term used in finance and real estate to refer to the date on which a financial term of a contract or transaction is set to change. It is the date on which the parties involved in a transaction agree to adjust the terms of the agreement to reflect current market conditions.
One example of an adjustment date is the date on which the interest rate of an adjustable rate mortgage (ARM) changes. An ARM is a type of mortgage where the interest rate is fixed for an initial period before it is reset, according to the parties’ agreement, on a scheduled adjustment date, to reflect current market interest rates. The time between each adjustment or adjustment date is referred to as the adjustment period.
Another example of an adjustment date is the agreed-upon time for the completion of calculations of specific charges due from a buyer and seller in a real estate transaction. The adjustment date serves as the basis by which the buyer and seller’s shared costs, such as property taxes, utilities, and mortgage loan interest charges, are prorated. The prorated costs are included as debits and credits on a statement of adjustments prepared by a lawyer or notary.
The examples illustrate how an adjustment date is used to adjust the terms of an agreement to reflect current market conditions. In the case of an ARM, the interest rate is adjusted on a scheduled adjustment date to reflect current market interest rates. In the case of a real estate transaction, the adjustment date is used to prorate shared costs between the buyer and seller based on the current market conditions.