A mortgage rate is the interest charged by a lender on a mortgage loan, expressed as a percentage of the loan amount. It determines how much you will pay in interest over the life of the loan and can significantly impact your monthly payments and overall cost of borrowing.
Key Points about Mortgage Rates:
- Types: Mortgage rates can be fixed or variable. A fixed-rate mortgage maintains the same interest rate throughout the term, while a variable-rate mortgage fluctuates based on changes in the lender's prime rate.
- Importance of Shopping Around: It's crucial to compare mortgage rates from various lenders to find the best deal that suits your financial situation. This process does not affect your credit score.
- Credit Score Impact: A higher credit score can lead to better mortgage rates, so monitoring your credit score is advisable.
Using tools like a mortgage coach can help you identify rates based on your credit profile and preferences, ensuring you make an informed decision when selecting a mortgage.