If you want to get a mortgage to buy a home or refinance your existing mortgage, you'll no doubt be concerned about mortgage rates and how they affect the amount you'll pay on your mortgage each month.
Mortgage rates vary among lenders and throughout different parts of the country. That means the mortgage rates that you see advertised may not be the same interest rates that a specific lender will offer you on your mortgage. In fact, mortgage rates may differ quite a bit depending on where you live and which lender you choose to help you with your mortgage.
Different lender, different mortgage rate
The mortgage rates you'll be offered will depend not only on the lender, but other factors too. Your credit score, debt-to-income ratio and down payment or home equity will affect the mortgage interest rates that a lender can offer you. If you have good credit, a lender may offer you more attractive rates or fees. A lender may also offer you better rates and fees if you have adequate income to repay your debts and a down payment or some equity.
Mortgage rates and fees may be negotiable. That's another reason why you should shop for a mortgage and compare mortgage products and rates. LendingTree can help you get customized mortgage offers from lenders so you can compare the interest rates and fees.
Rates also differ depending on whether you pay points. Pay more points, and a lender probably will offer you lower rates. Pay fewer or no points, and a lender likely will offer you higher rates.
Lower rate means lower payment
A lower interest rate on your mortgage is important because your payment will be lower than if you have a higher interest rate. The total cost of your mortgage over the time that you keep that mortgage will be lower if you have a lower interest rate as well.
Mortgage rates change from day to day, and though these changes in rates may be small, they can still affect your mortgage payment. For example, if you borrowed $200,000 with a mortgage interest rate of 5.5 percent from one lender, your payment would be $1,135 per month. The payment on the same amount with a mortgage interest rate of 5.3 percent from a different lender would be $1,110. That's a savings of $25 each month, or $300 each year, for the same mortgage due only to the lower rate offered to you by a different lender.