What term describes the stated interest rate on a mortgage or loan agreement?

The stated interest rate on a mortgage or loan agreement is referred to as the note rate. This is the rate agreed upon by both the lender and borrower at the time of signing the mortgage note, which determines the amount of interest that will be charged over the life of the loan. The note rate is important because it directly affects the monthly payment that the borrower will make and ultimately influences the overall cost of the loan.

Understanding the note rate is crucial for borrowers because it represents the actual interest expense they will incur on their loan. It is distinctly different from other terms like APR (Annual Percentage Rate), which includes both the interest rate and any additional fees that the lender may charge, giving a more comprehensive view of borrowing costs. Similarly, fixed rate refers to a type of interest rate structure rather than the stated interest itself, and market rate pertains to the prevailing interest rates in the financial markets, which can fluctuate and influence the note rate but are not synonymous with it.