Glossary
Fixed rate
An interest rate that never changes for the life of the loan — your payment is the same every month.
A fixed rate is locked at closing and holds for the entire term, so your principal-and-interest payment never moves regardless of what markets do. It trades a potentially lower starting rate for certainty, which is valuable when rates are near a cycle low or when a stable budget matters more than chasing savings. Its opposite, an adjustable rate, starts lower but can climb once the introductory period ends.
Related terms
- DTI Debt-to-income ratio: monthly debt payments divided by gross monthly income. Most lenders draw the line at 36–43%.
- Loan-to-value ratio The loan amount divided by the property's value, expressed as a percentage — a core number in mortgage and home-equity underwriting.
- Promissory note The legal document where you promise to repay a loan under specific terms — amount, rate, schedule, and what happens on default.
- Charge-off When a creditor gives up trying to collect a debt through normal billing and writes it off as a loss — typically after 180 days of non-payment.
- Amortization The schedule that splits each payment between interest and principal. Early payments are mostly interest; the balance flips near the end of the term.
- Credit utilization ratio The share of your available revolving credit you are currently using — the second-biggest factor in your credit score, after payment history.