Tips that show you what a mortgage interest rate is.
There are quite a few different lenders and they all must follow the same guidelines, rules and regulations. The interest rates will vary. The amount of interest that will be placed on a mortgage loan is mainly based on the credit score of the borrower.
The Definition of Mortgage Interest Rate
This is actually the percentage rate that the lender charges for the use of the loan money. A normal rate would be around five or six percent. Rates can be higher or lower depending on the credit history of the borrower. A good credit rating or score, especially one above eight hundred will mean a much lower interest rate. Interest rates increase considerably if the credit history is bad.
The Higher the Rate- The Higher the Monthly Payment
When you are paying a high interest rate you monthly payment will
be higher, whereas a person with good credit may only be paying four or five hundred dollars a month. These rates also depend on the amount of the loan, naturally the payment on a one hundred thousand dollar loan will be much higher than a fifty thousand dollar mortgage loan. However if one home owner has bad credit the payments could be almost the same.
Principle + Interest + Real Estate Taxes + Insurance
The above equation represents a common term used by lenders which is referred to as PITI. It simply indicates that your total monthly payment includes amounts for the principle payment, plus the interest, the real estate taxes and the amount of the insurance payment that is due each month.
Checking with several different lenders is important. The mortgage interest rate may not change much, but you need to be comfortable with the reputation of the lender you have chosen.