Rates and Pricing

A 2-1 buydown is a temporary buydown structure in which the payment or rate is reduced more in the first year and less in the second year before returning to the standard level.

Adjustment period is the interval at which an adjustable-rate mortgage can reset after the initial fixed-rate period ends.

APR is an annualized borrowing-cost measure that combines the mortgage rate with certain finance charges.

A buydown is a pricing arrangement that lowers the borrower's mortgage rate or payment, either temporarily or for the full term, by using upfront money.

Discount points are upfront charges paid to lower the mortgage interest rate.

A float-down is a feature that can let a borrower improve a locked mortgage rate if market pricing moves favorably.

Fully indexed rate is the rate concept produced when an ARM's index and margin are combined under the loan terms.

Index rate is the external benchmark used in many adjustable-rate mortgages to help determine future rate changes.

Initial fixed-rate period is the opening stretch of an adjustable-rate mortgage during which the rate does not reset.

Interest rate is the percentage cost charged on the unpaid mortgage balance.

Lender credits are pricing concessions from the lender that reduce upfront closing costs, usually in exchange for a higher rate or different pricing structure.

LLPA is a pricing adjustment applied to certain mortgages based on risk-related loan and borrower characteristics.

Lock period is the amount of time a mortgage rate lock remains in effect before it expires.

Margin is the loan-specific amount added to the index in many adjustable-rate mortgages to help determine the new rate.

A mortgage rate sheet is a pricing document showing rates, points, and adjustments for different loan scenarios.

Note rate is the contractual mortgage interest rate written into the promissory note.

Origination fee is a lender charge for making, processing, or underwriting the mortgage.

Par rate is the mortgage rate at which the loan is priced without discount points or lender credits at that moment.

A permanent buydown lowers the mortgage rate for the full life of the loan rather than only for an initial period.

Prepaid interest is the interest collected at closing for the days between loan funding and the start of the normal payment cycle.

A prepayment penalty is a fee some mortgage loans charge if the borrower pays off the debt too early under the loan terms.

A rate cap is the contractual limit on how much an adjustable-rate mortgage rate can rise at certain points or over the life of the loan.

A rate floor is the contractual minimum below which an adjustable-rate mortgage rate will not fall.

A rate lock is a lender commitment to honor specific mortgage pricing for a defined period if stated conditions are met.

Mortgage pricing terms that explain rates, points, fees, locks, and the way lenders quote borrowing cost.

A teaser rate is an unusually attractive introductory mortgage rate designed to apply only for an initial period.

A temporary buydown lowers the borrower's payment or effective rate for an initial period before the loan returns to its regular scheduled structure.

VA funding fee is the one-time program charge many VA borrowers pay to use the VA loan guarantee structure.

Yield spread premium is a mortgage compensation term usually discussed in historical or legacy pricing contexts.