What is the mortgage interest rate?
The interest you pay on a mortgage is the annual cost that you pay to borrow the money, which is calculated as a percentage of the loan balance. Mortgage interest rates do not reflect origination fees or other charges, whereas the APR does.
If you plan on borrowing money from a lender to finance your home, you can’t avoid paying interest on loans. Interest rates are calculated by many different factors including the health of the economy, inflation, and your personal credit history. While some of these factors are not in your control, you can decrease enjoy the benefits of a cheaper interest rate by maintaining a high-quality credit score and shopping lenders.
In most cases, your monthly loan payments do not change over time, but the amount of interest you pay does. This process is called “amortization.” For more information on how amortization works, click here.