Interest rate
The percentage a lender charges to borrow money, used to figure the interest part of each payment. It does not include fees, which is why the APR is often higher.
Also called: note rate, mortgage rate, rate
Related terms
The yearly cost of a loan including the interest rate plus certain fees, such as points and origination charges. It is usually higher than the interest rate and makes it easier to compare offers from different lenders.
Upfront fees paid to the lender at closing to lower the interest rate. One point equals 1% of the loan amount. Paying points makes sense mainly if you keep the loan long enough to recover the cost.
A lender's promise to hold a specific interest rate and points for a set period while the loan closes. If the lock expires before closing, extending it can cost extra.
A loan used to buy real estate, with the property pledged as security. If the borrower stops paying, the lender can foreclose. Some states use a deed of trust instead of a mortgage document, but people call both a mortgage.
A mortgage whose interest rate stays the same for the life of the loan, so principal and interest payments never change. Taxes and insurance in the payment can still go up.
A mortgage with a fixed rate for an initial period, then a rate that resets at set intervals based on an index plus a margin. Caps limit how much it can change. Payments can rise after the fixed period.