Mortgage & HMDA Glossary

A

Action taken

The core HMDA field recording what happened to an application. The codes distinguish loans that were originated, approved but not accepted, denied, withdrawn, closed for incompleteness, or purchased. Every The Mortgage Record approval and denial figure is built by classifying this field. See our methodology.

Amortization

The schedule by which each mortgage payment is split between interest and principal. Early payments are mostly interest; over the term the split shifts toward principal until the balance reaches zero.

APOR (Average Prime Offer Rate)

A weekly benchmark rate published by the CFPB that represents typical pricing offered to the lowest-risk borrowers. It is the baseline against which a loan’s rate spread is measured, so it underpins how we flag potential overpricing in the overcharge check.

Approval rate

The share of decided applications a lender approved — loans originated plus those approved but not accepted — usually excluding withdrawn and incomplete files. It is only fair to compare within the same loan type, purpose, and borrower profile. Our approval tool does exactly that.

Approved but not accepted

Action-taken code 2: the lender approved the loan on its terms, but the applicant chose not to close — often because they found a better offer or their plans changed.

APR vs interest rate

The interest rate is the cost of borrowing the principal. The APR (annual percentage rate) folds in points and certain lender fees, so it reflects the loan’s total yearly cost and is usually a bit higher than the note rate. Comparing APRs helps you weigh loans with different fee structures.

Adjustable-rate mortgage (ARM)

See Fixed-rate vs adjustable-rate mortgage. An ARM starts with a fixed rate for an intro period, then adjusts periodically with a market index. Our ARM stress test shows how payments could move.

Attorney review New Jersey

A New Jersey feature of most residential contracts: after both sides sign, there is typically a three-business-day window in which either party’s attorney can review, revise, or cancel the contract. The clock and mechanics matter for timing a purchase — see our attorney-review timeline tool.

Automated underwriting system (AUS)

Software that scores an application against a loan program’s rules and returns a recommendation (for example, approve/eligible). It guides but does not replace the human underwriter. The two dominant systems are DU and LPA.

C

Cash-out refinance

A refinance for more than the current loan balance, letting the borrower pocket the difference in cash. It raises the loan amount and often the rate, and lenders scrutinize the resulting LTV.

CLTV (combined loan-to-value)

The combined balance of all loans secured by a property — for example a first mortgage plus a HELOC — divided by the property’s value. Lenders cap CLTV to limit their total exposure.

Closing costs / total loan costs

The full set of fees required to close a loan: origination charges, third-party services (appraisal, title, recording), taxes, and prepaid items. They are itemized on the Loan Estimate and finalized on the Closing Disclosure.

Closing Disclosure

The standardized form listing the final loan terms and costs, provided at least three business days before closing. Compare it line by line against your Loan Estimate to catch changes.

Common level range (NJ Chapter 123) New Jersey

A New Jersey rule that sets an acceptable band around a municipality’s average assessment-to-sales ratio. If a property’s assessment falls outside that band, its taxable value can be adjusted on appeal. Our property-tax appeal tool uses it to estimate whether an appeal is worth filing.

Conforming loan

A conventional loan that meets Fannie Mae and Freddie Mac requirements, including staying at or under the annual conforming loan limit. Conforming loans can be sold to the GSEs, which tends to keep their rates lower.

Conforming loan limit

The maximum loan amount eligible for purchase by Fannie Mae and Freddie Mac, set each year by the FHFA. It is higher in designated high-cost counties, several of which are in New Jersey. Loans above it are jumbo.

Conventional loan

A mortgage that is not insured or guaranteed by a government agency. Most conventional loans follow Fannie Mae or Freddie Mac guidelines and require PMI when the down payment is under 20%.

D

Denied

Action-taken code 3: the lender declined the application after a credit decision. The specific denial reason is reported separately. If you have been turned down, our after-denial guide explains next steps.

Denial rate

The share of decided applications a lender denied. Because it swings with loan type, purpose, and borrower mix, a raw denial rate is only meaningful when compared like-for-like — the comparison our approval tool is built to make.

Denial reason

The HMDA field naming why an application was denied, such as debt-to-income ratio, credit history, collateral (the property’s value), insufficient cash, or incomplete application. Debt-to-income is consistently the most common reason.

Denial-disparity ratio

One group’s denial rate divided by a reference group’s. Examiners treat a ratio at or above roughly 2× as notable and 3× as warranting scrutiny. It flags where to look, not proof of discrimination &mdash.

Discount points

Optional upfront fees — each roughly 1% of the loan amount — paid to permanently lower the interest rate. Whether they pay off depends on how long you keep the loan; our buy-down break-even calculator does the math.

Down payment

The portion of a home’s price paid in cash up front; the remainder is financed. A larger down payment lowers your LTV, can eliminate mortgage insurance, and often improves your rate.

DTI (debt-to-income ratio)

Your total monthly debt payments divided by gross monthly income, shown as a percentage. It is a central underwriting factor and the single most common HMDA denial reason. Some lenders are more flexible on DTI than others.

Desktop Underwriter (DU) / Loan Product Advisor (LPA)

The two dominant automated underwriting systems: DU is Fannie Mae’s and LPA is Freddie Mac’s. Each assesses whether an application is eligible for that GSE’s conforming programs.

E

Escrow

An account the loan servicer uses to collect a slice of your property taxes and homeowners insurance with each monthly payment, then pays those bills when due. (The word also describes funds held by a neutral third party during a purchase.)

Exit tax New Jersey

Not a separate tax despite the nickname. New Jersey requires certain sellers — mainly non-residents — to prepay estimated state income tax on the sale at closing; any overpayment is refunded when you file. It affects seller net proceeds, not the buyer’s mortgage.

F

Fair lending

The principle — backed by laws such as the Equal Credit Opportunity Act and Fair Housing Act — that lenders must not discriminate based on race, ethnicity, sex, age, or other protected characteristics. HMDA data is a primary screening tool for spotting possible problems.

Fannie Mae

A government-sponsored enterprise that buys conforming conventional loans, bundles them into securities, and sets underwriting standards used across the industry. Its automated system is Desktop Underwriter.

FHA loan

A mortgage insured by the Federal Housing Administration. It allows lower down payments and credit scores than most conventional loans, in exchange for an FHA mortgage insurance premium. See our FHA lender rankings.

Fixed-rate vs adjustable-rate mortgage (ARM)

A fixed-rate mortgage keeps the same interest rate for the entire term, so the principal-and-interest payment never changes. An ARM carries a lower fixed rate for an intro period (say 5 or 7 years), then adjusts periodically with a market index — which can raise or lower the payment. Our ARM stress test models the worst case.

Freddie Mac

A GSE that, like Fannie Mae, buys conforming conventional loans and guarantees mortgage-backed securities. Its automated system is Loan Product Advisor.

G

Ginnie Mae

A government corporation that guarantees securities backed by FHA, VA, and USDA loans. Unlike the GSEs it does not buy loans itself; it backs the securities that fund the government-loan market.

GSE (government-sponsored enterprise)

A congressionally chartered company — Fannie Mae or Freddie Mac — that buys conforming loans on the secondary market and, through their guidelines, sets much of the market’s underwriting rules.

H

HELOC (home equity line of credit)

A revolving second-lien loan you draw against as needed up to a limit, usually with a variable rate. Because it sits behind the first mortgage, it counts toward your CLTV.

HMDA (Home Mortgage Disclosure Act)

A federal law that requires most mortgage lenders to publicly report loan-level data on the applications they receive and the loans they make. This public dataset is the foundation of everything on The Mortgage Record; how we clean and analyze it is spelled out in our methodology.

Home improvement

A HMDA loan-purpose category for financing repairs, additions, or other improvements to a dwelling.

Home purchase

The HMDA loan-purpose category for financing the purchase of a dwelling — the largest and most-analyzed segment on The Mortgage Record.

HOEPA / high-cost mortgage

Under the Home Ownership and Equity Protection Act, a loan whose rate or fees exceed federal thresholds is a “high-cost mortgage,” triggering extra disclosures and borrower protections. HMDA flags whether each loan is HOEPA-covered.

J

Jumbo loan

A mortgage that exceeds the conforming loan limit, so it cannot be sold to the GSEs. Jumbo loans usually require stronger credit, more reserves, and stricter underwriting.

L

Loan Application Register (LAR)

The dataset a HMDA-reporting lender files each year, with one row per application or loan and dozens of fields — action taken, amounts, rates, applicant demographics, and more. Combined across lenders, the LARs are the raw material The Mortgage Record analyzes.

LEI (Legal Entity Identifier)

A 20-character global code that uniquely identifies each financial institution. In HMDA data the LEI is how every loan record is attributed to a specific lender, which lets us build accurate per-lender profiles.

Lender credits

Money the lender puts toward your closing costs, typically in exchange for accepting a higher interest rate. They reduce cash needed at closing but raise the long-run cost of the loan.

Lien / first lien / second lien

A legal claim on a property that secures a debt. The first lien (your primary mortgage) is repaid first if the home is sold or foreclosed; a second lien such as a HELOC or home-equity loan is paid only after the first is satisfied, which makes it riskier and usually pricier.

Loan Estimate

A standardized three-page form the lender must provide within three business days of your application, disclosing the interest rate, monthly payment, and estimated closing costs. Use it to shop lenders on equal footing.

Loan term

How long you have to repay the loan, commonly 15 or 30 years for a mortgage. A longer term lowers the monthly payment but increases total interest paid.

LTV (loan-to-value)

The loan amount as a percentage of the property’s value. A higher LTV means a smaller down payment and more risk to the lender, which can raise the rate or trigger PMI.

M

Mansion tax New Jersey

A New Jersey 1% fee the buyer generally pays on residential purchases of $1 million or more, due at closing. Our NJ transaction-tax calculator estimates it alongside the realty transfer fee.

MIP (FHA mortgage insurance premium)

The mortgage insurance on an FHA loan: an upfront premium (usually financed) plus an annual premium paid monthly. On most FHA loans with a low down payment, the annual MIP lasts the life of the loan — a key difference from cancelable PMI.

N

NJHMFA New Jersey

The New Jersey Housing and Mortgage Finance Agency, which offers below-market loans and down-payment assistance to eligible buyers, especially first-time and moderate-income households. Our NJ down-payment assistance tool helps estimate what you might qualify for.

O

Originated

Action-taken code 1: the lender approved the loan and it closed and funded. Originations are the loans that actually happened, and the basis for most volume rankings.

Origination charges

The fees a lender charges for making the loan — application, processing, underwriting, and any origination fee or points. They are a major, negotiable component of closing costs.

Originator vs servicer

The originator is the lender that makes your loan; the servicer is the company that then collects your payments, manages escrow, and handles the account. They are often two different companies, and servicing can be sold during the life of the loan.

P

PMI (private mortgage insurance)

Insurance on a conventional loan that protects the lender when the down payment is under 20%. Unlike FHA MIP, PMI can usually be canceled once you reach about 20% equity. Our PMI removal calculator shows when.

Pre-approval vs pre-qualification

Pre-qualification is an informal estimate based on information you state, with little verification. Pre-approval involves a credit pull and documentation review, producing a stronger conditional commitment that sellers take more seriously. Neither is a final loan approval.

Prepaid items

Amounts collected at closing to fund your escrow account and cover prepaid interest, property taxes, and homeowners insurance. They are part of closing costs but are your own future expenses, not lender fees.

Purchased loan

Action-taken code 6: a loan the reporting institution bought from another lender rather than originating. We exclude purchased loans when measuring who actually made a loan, to avoid double-counting on the secondary market.

R

Rate buy-down

Paying money upfront to lower the interest rate — either permanently with discount points, or temporarily (for example a 2-1 buy-down that reduces the rate in the first two years). Our break-even calculator tells you when it pays off.

Rate lock

A lender’s guarantee to hold a quoted interest rate for a set number of days while your loan closes, protecting you if market rates rise before closing.

Rate spread

How much a loan’s annual percentage rate exceeds the APOR for a comparable loan, in percentage points. It is the closest thing HMDA has to a price tag, so The Mortgage Record uses it to compare lender pricing and power the overcharge check. A large positive spread can flag a high-cost loan.

Realty transfer fee New Jersey

A New Jersey fee the seller pays at closing when a deed is recorded, calculated on a sliding scale of the sale price. Estimate it with our NJ transaction-tax calculator.

Recast

Re-amortizing your existing loan after a large one-time principal payment, which lowers the monthly payment while keeping the same rate and term. It is cheaper than refinancing when your rate is already good — compare the two with our recast-vs-refinance calculator.

Redlining

The illegal practice of denying or discouraging lending in particular neighborhoods, historically drawn along racial lines. Modern fair-lending exams use HMDA lending patterns by geography to screen for it.

Refinance

Replacing an existing mortgage with a new one — to lower the rate, shorten the term, drop mortgage insurance, or (in a cash-out) tap equity. In HMDA it is a distinct loan purpose from home purchase.

Reverse mortgage

A loan for older homeowners that converts home equity into cash with no required monthly payments; interest accrues and the balance is repaid when the home is sold, the owner moves out, or dies. HMDA flags reverse mortgages so they can be analyzed separately.

S

Secondary market

Where mortgages are bought and sold after they are made. Selling loans to the GSEs or other investors replenishes a lender’s cash so it can fund new loans, and it explains why your servicer may change.

U

Underwriting

The lender’s process of verifying your income, assets, credit, and the property’s value to decide whether to approve the loan and on what terms. Much of it is guided by an automated underwriting system, but a human underwriter makes the final call.

USDA loan

A mortgage backed by the U.S. Department of Agriculture for low-to-moderate-income buyers in eligible rural and suburban areas, often with no down payment. See our USDA lender rankings.

V

VA loan

A mortgage guaranteed by the Department of Veterans Affairs for eligible service members, veterans, and surviving spouses. It typically requires no down payment and no monthly mortgage insurance. See our VA lender rankings.

Definitions are for general education and reflect common U.S. mortgage and HMDA usage; program rules and New Jersey figures change over time. Nothing here is legal, tax, or financial advice. For how The Mortgage Record derives its numbers, see the methodology.