Rates and Pricing

Rates and pricing pages explain what a mortgage actually costs, how lenders quote that cost, and why two loans with the same balance can still produce different payments or closing expenses.

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What This Section Covers

Start with Interest Rate, Note Rate, APR, and Basis Point if you want the clearest first pass on mortgage cost language. Those pages help separate the contract rate, small rate movements, and the broader cost picture.

The next pricing cluster is about tradeoffs. Rate Quote, Mortgage Points, Price in Points, Discount Points, Origination Points, Point Break-Even, No-Points Loan, Lender Credits, Rebate Pricing, Premium Pricing, Par Rate, Borrower-Paid Closing Costs, Lender-Paid Closing Costs, Origination Fee, and Buydown explain how the same loan can be structured with more cash up front, less cash up front, or lower payment in the early years.

This section also covers the pricing language borrowers hear when a quote is built and finalized. Mortgage Rate Sheet, Pricing Adjustment, Pricing Hit, Loan-Level Price Adjustment, Note Rate, APR, and Prepaid Interest explain the difference between internal quote mechanics, scenario-based pricing changes, the contract rate, the broader borrowing-cost measure, and the one-time closing-period interest item.

The lock-related pages explain timing risk between quote and closing. Rate Lock, Lock Confirmation, Lock Period, Rate Lock Fee, Rate Lock Deposit, Rate Float, Float Down, Rate Lock Expiration, Rate Lock Extension, Lock Extension Fee, Rate Renegotiation, and Relock help borrowers understand what is protected, what is still only quoted, for how long, whether a better market move can still help after locking, and what happens if closing drifts past the original lock window.

For adjustable-rate borrowers, start with ARM Reset. Then use ARM Adjustment Notice, Index Rate, Margin, Fully Indexed Rate, Rate Cap, Initial Adjustment Cap, Periodic Adjustment Cap, Lifetime Rate Cap, Rate Floor, Teaser Rate, Adjustment Period, and Initial Fixed-Rate Period to understand what drives the new rate, when resets can happen, how the borrower is told about the new payment, and how much the payment can still move.

This section also includes payoff-flexibility and program-specific pricing items such as Prepayment Penalty and VA Funding Fee.

In this section

• 2-1 Buydown
  A temporary buydown with a larger first-year reduction and a smaller second-year reduction.
• Adjustment Period
  The interval between ARM rate resets after the initial fixed period.
• Annual Percentage Rate
  A borrowing-cost measure that combines the rate with certain finance charges.
• ARM Adjustment Notice
  Notice showing the new ARM rate, payment, and effective date before an adjustable-rate change takes effect.
• ARM Reset
  The point when an adjustable-rate mortgage is reviewed under its formula and the new rate may change the payment.
• Basis Point
  Small rate or pricing unit equal to one one-hundredth of a percentage point.
• Borrower-Paid Closing Costs
  Closing costs the borrower pays directly instead of offsetting them through lender pricing.
• Buydown
  An upfront pricing structure that lowers the borrower's rate or payment.
• Discount Points
  Upfront charges paid to lower the mortgage interest rate.
• Float Down
  A lock feature that can improve pricing if market rates move lower.
• Fully Indexed Rate
  The ARM rate produced when the index and margin are combined.
• Index Rate
  The external benchmark many ARMs use to calculate future rate changes.
• Initial Adjustment Cap
  ARM limit on how much the rate can change at the first adjustment after the initial fixed period.
• Initial Fixed-Rate Period
  The opening ARM period when the interest rate does not reset.
• Interest Rate
  The percentage charged on the unpaid mortgage balance.
• Lender Credits
  Pricing concessions that reduce upfront costs, often in exchange for a higher rate.
• Lender-Paid Closing Costs
  Closing costs covered or offset through lender pricing, usually with a rate or credit tradeoff.
• Lifetime Rate Cap
  ARM limit on the maximum rate increase allowed over the full life of the loan.
• Loan-Level Price Adjustment
  A pricing adjustment based on risk-related loan and borrower characteristics.
• Lock Confirmation
  Documentation that records the locked mortgage rate, pricing terms, and expiration date.
• Lock Extension Fee
  Cost charged to keep a mortgage rate lock active after the original lock period is not enough.
• Lock Period
  The amount of time a mortgage rate lock stays in effect.
• Margin
  The loan-specific amount added to the index on many ARMs.
• Mortgage Points
  Pricing units that express upfront mortgage costs or credits as a percentage of the loan amount.
• Mortgage Rate Sheet
  A pricing sheet showing rates, points, and adjustments for different loan scenarios.
• No-Points Loan
  Mortgage option quoted without borrower-paid points, often used as a comparison point for rate tradeoffs.
• Note Rate
  The contractual interest rate written into the promissory note.
• Origination Fee
  A lender charge for making, processing, or underwriting the mortgage.
• Origination Points
  Origination charges expressed as points, usually as a percentage of the mortgage loan amount.
• Par Rate
  The rate priced without discount points or lender credits at that moment.
• Periodic Adjustment Cap
  ARM limit on how much the rate can change from one adjustment period to the next.
• Permanent Buydown
  A buydown that lowers the mortgage rate for the full loan term.
• Point Break-Even
  Time estimate for how long monthly savings must last before paid mortgage points recover their upfront cost.
• Premium Pricing
  Mortgage pricing structure where a higher rate can create value used to offset upfront costs.
• Prepaid Interest
  Interest collected at closing for the days before the normal payment cycle begins.
• Prepayment Penalty
  A fee some loans charge if the borrower pays off the debt early.
• Price in Points
  Mortgage pricing expression showing upfront cost or credit as points relative to the loan amount.
• Pricing Adjustment
  A change to mortgage pricing based on loan, borrower, property, market, or lock factors.
• Pricing Hit
  An unfavorable mortgage pricing adjustment that worsens rate, points, credits, or costs.
• Rate Cap
  Caps on how much an ARM rate can rise at resets or over the loan's life.
• Rate Float
  The period when a borrower has not locked mortgage pricing and the quote can still move.
• Rate Floor
  The minimum rate below which an ARM will not fall.
• Rate Lock
  A lender commitment to honor specific mortgage pricing for a defined period.
• Rate Lock Deposit
  Upfront deposit a lender may require when a borrower locks mortgage pricing.
• Rate Lock Expiration
  The date mortgage pricing protection ends if the loan has not closed or funded.
• Rate Lock Extension
  Extra lock time added when the original rate-lock window is about to expire before the mortgage closes.
• Rate Lock Fee
  Charge a lender may collect for locking mortgage pricing or extending lock-related protection.
• Rate Quote
  Mortgage pricing estimate showing a possible rate, points, credits, and lock assumptions before final commitment.
• Rate Renegotiation
  Request to change locked mortgage pricing when market pricing or loan circumstances shift before closing.
• Rebate Pricing
  Mortgage pricing structure where the selected rate produces credit value that may offset borrower costs.
• Relock
  A new mortgage pricing lock after a prior lock expires, is canceled, or no longer fits the loan scenario.
• Teaser Rate
  A temporary introductory rate designed to apply only for an initial period.
• Temporary Buydown
  A buydown that lowers the payment or effective rate for an initial period.
• VA Funding Fee
  The one-time charge many VA borrowers pay to use the VA guarantee program.
• Yield Spread Premium
  A mortgage compensation term most often discussed in older pricing contexts.