Mortgage Glossary

The annual percentage rate (APR) expresses the cost of a mortgage as a yearly rate that includes the interest rate and certain additional charges for obtaining the loan. It is a broader snapshot than the interest rate. It is often higher than that rate, but “often” is not a guarantee in every structure.

The borrower is the person or people who take out the mortgage and are responsible for repayment. More than one borrower can share that obligation. This page describes the consumer role, not every legal form a borrower might take.

The Closing Disclosure is an official form that states the final loan terms and closing costs for a covered mortgage. It is used near closing, or consummation, and is written so a consumer can compare it with the earlier Loan Estimate.

A conventional loan is a mortgage that is not insured or guaranteed through a federal housing program such as FHA. Whether Fannie Mae or Freddie Mac may buy the loan is a separate “conforming” question. Not every conventional loan is conforming.

A credit score is a number built from credit-history information and used in many lending decisions. Different companies publish different models. “Credit score” is not another word for one brand name.

Debt-to-income ratio (DTI) is monthly debt payments divided by gross monthly income. It is one way lenders look at capacity to repay. This page does not treat any DTI figure as a pass/fail line.

A mortgage escrow account holds a portion of each payment so the servicer can pay certain property bills, typically property taxes and homeowners insurance. This page is that servicing account. Other closing-table uses of “escrow” are different ideas.

An FHA loan is a mortgage typically made by a private lender and insured under the Federal Housing Administration program. The insurance supports the lender, not a government-issued check to the buyer. It is a different product family from a conventional loan.

The Home Mortgage Disclosure Act (HMDA) is a federal law that requires many covered financial institutions to collect, report, and publicly disclose loan-level information about mortgage applications and loans. Regulation C implements the statute. Coverage is not universal, and a HMDA row is not a finding of discrimination.

The interest rate is the rate charged on the amount borrowed. It is the price of the credit itself. It is not the annual percentage rate, which is a wider cost-of-credit measure.

A Legal Entity Identifier (LEI) is a unique 20-character alphanumeric code that identifies a legal entity in a global system. It answers who the entity is. It is not a mortgage license, not an RSSD ID, and not an NMLS ID. This page does not assume every mortgage lender has one.

The lender is the party that makes or extends the mortgage credit. That role is about originating the loan. It is not defined by which public licensing website a firm appears on, and it is not defined by who later services the account.

The Loan Estimate is an official form that lists estimated loan terms and estimated closing costs after a consumer applies for a covered mortgage. It is a starting picture of the deal, written so it can be compared with the later Closing Disclosure.

Loan-to-value ratio (LTV) compares the loan amount with the property’s value. It describes how much of the value is borrowed. This page does not treat any LTV as a universal maximum.

A mortgage is a loan secured by real property. People often use one to buy or refinance a home, but those uses do not define the term by themselves. The property stands as collateral for the debt.

A mortgage servicer is the company that administers a mortgage after it has been made. It applies payments, sends statements, and often manages an escrow account. The servicer may be the original lender or a different firm.

The Nationwide Multistate Licensing System & Registry (NMLS) is a system participating state and territorial agencies use to receive and manage license and registration filings. NMLS does not grant or deny authority. It is not the same as NMLS Consumer Access or an NMLS ID.

Private mortgage insurance (PMI) is insurance on a conventional mortgage that protects the lender if the borrower does not pay. It is a conventional-loan product feature. It is not FHA mortgage insurance, and it does not protect the homeowner’s equity.

An RSSD ID, also called ID_RSSD, is a unique identifier the Federal Reserve assigns to an entity in its structure database. It labels the entity. It does not, by itself, say what the entity is, and it is not a claim that every mortgage lender has one.