The interest rate you pay on a mortgage is the single biggest factor in your monthly payments. The higher the mortgage rate, the more you will pay over the life of the home loan. It is thus very important for you to compare mortgage rates when you shop for a loan.
There are two basic types of mortgage rates: fixed and variable. The best type for you will depend on your financial situation. For a fixed rate loan, the mortgage interest rate is set when the loan is originated, and is fixed for the life of the loan. For variable rate loans, also called adjustable rate mortgages (ARM), the loan interest rate can change over time, often based on a financial index such as the prime rate. Often an adjustable rate loan can be obtained at a lower interest rate, but you are accepting the risk that interest rates may go up in the future. A fixed rate loan may have higher initial cost, but protects you from future changes in mortgage rates. You can use our mortgage loan calculators to see which rate type might be best for you.
Mortgage rates can also vary between home purchase loans and refinance loans. When comparing mortgage rates, be sure to specify whether you are looking at home purchase mortgage rates, or mortgage refinance rates. Rates may also vary for other loan types, such as home equity loans or second mortgages.
The best way to get a low mortgage rate is to get quotes from multiple lenders, and compare interest rates, loan terms, closing costs and other factors. With LendingTree, you can receive quotes from multiple lenders. Get a mortgage rate quote here.
